Yes, you may have to pay tax on interest earned from a LemFi savings account. Interest is paid "gross" (without tax deducted), meaning you are responsible for reporting any interest that exceeds your personal savings allowance to HM Revenue & Customs (HMRC), depending on your tax bracket.
What this means
LemFi pays interest gross (without tax deducted), meaning it is your responsibility to report and pay any tax due to HMRC on interest exceeding £1,000 for basic-rate or £500 for higher-rate taxpayers.
- Interest is paid in full, meaning LemFi does not deduct income tax.
- Depending on your income tax band, you may earn up to £1,000 (basic rate) or £500 (higher rate) of interest per year without paying tax.
- If your interest exceeds your allowance, you are responsible for paying tax on the excess, often via a self-assessment return.
- The savings account is variable and currently pays around 3.66% gross p.a. (4.00% AER).
What you should do
- Check your local tax requirements or seek professional advice if needed.
- You can access your savings statements in the app
- These can help with tax reporting
- You can download your statement from the app for your records.