HMRC has provided clarity on tax regulations for state pensioners regarding savings interest. Responding to an inquiry on social media, HMRC confirmed that state pensioners follow the same tax rules as other basic-rate taxpayers, allowing them to earn up to £1,000 in interest tax-free under the personal savings allowance (PSA). Higher-rate taxpayers are limited to a £500 allowance, while additional-rate taxpayers do not receive any allowance. Since April 2016, savings providers have paid interest tax-free, and the PSA remains unchanged for the 2024/25 tax year. Furthermore, low earners may benefit from a starting rate for savings income, which permits an additional £5,000 in tax-free savings interest if their total earnings are below £12,570. Martin Lewis, a well-known financial expert, highlighted the impact of fiscal drag, where frozen tax thresholds lead to increased tax liabilities for individuals as their earnings rise with inflation, pushing them above the tax-free threshold.