UK Savings Interest Calculator
Calculate your real savings interest after tax. Unlike most calculators, we include the Personal Savings Allowance (£1,000 / £500 / £0) based on your tax band.
Your savings details
Current best easy-access rates are around 4-5% AER.
Your Personal Savings Allowance
As a basic rate (20%) taxpayer, you can earn up to £1,000 in interest tax-free each year.
Your returns after tax
Final balance (gross)
£96,288
After tax
£94,031
Interest breakdown over 5 years
Where your interest goes
First year snapshot
⚠️ Your interest exceeds your PSA. Consider an ISA for tax-free growth.
Year-by-year breakdown
| Year | Interest | Tax | Balance |
|---|---|---|---|
| 1 | +£2,445.27 | −£289.05 | £58,445.27 |
| 2 | +£2,833.25 | −£366.65 | £67,278.52 |
| 3 | +£3,239.04 | −£447.81 | £76,517.56 |
| 4 | +£3,663.48 | −£532.70 | £86,181.04 |
| 5 | +£4,107.42 | −£621.48 | £96,288.47 |
Personal Savings Allowance (2025/26)
| Tax Band | Income Range | PSA | Tax on Excess |
|---|---|---|---|
| Non-taxpayer | Up to £12,570 | Up to £5,000* | 0% |
| Basic rate | £12,571 – £50,270 | £1,000 | 20% |
| Higher rate | £50,271 – £125,140 | £500 | 40% |
| Additional rate | Over £125,140 | £0 | 45% |
* Non-taxpayers may also benefit from the starting rate for savings (up to £5,000), which is reduced by £1 for every £1 of income above the personal allowance.
Savings vs ISA: Which is better?
Regular savings account
- ✓Often higher interest rates than ISAs
- ✓PSA covers first £1,000/£500 tax-free
- ✓No annual contribution limit
- ✗Interest above PSA is taxed
- ✗Higher/additional rate taxpayers pay more
Cash ISA
- ✓100% tax-free interest, no limit
- ✓Better for higher/additional rate taxpayers
- ✓No tax return reporting needed
- ✗£20,000 annual contribution limit
- ✗Rates often slightly lower than non-ISA
Rule of thumb: If your interest stays within your PSA, a higher-rate regular savings account may be better. If you exceed your PSA or are a higher/additional rate taxpayer, prioritise ISAs for their unlimited tax-free growth.
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Frequently asked questions
What is the Personal Savings Allowance (PSA)?
The Personal Savings Allowance lets you earn a certain amount of interest tax-free each year. Basic rate taxpayers get £1,000, higher rate taxpayers get £500, and additional rate taxpayers get £0. Non-taxpayers can earn up to £5,000 tax-free through the starting rate for savings (in addition to their personal allowance).
How much savings interest can I earn tax-free?
It depends on your tax band. Basic rate taxpayers (20%) can earn £1,000 in interest tax-free. Higher rate taxpayers (40%) can earn £500 tax-free. Additional rate taxpayers (45%) have no Personal Savings Allowance. Non-taxpayers may be able to earn up to £5,000 tax-free through the starting rate for savings.
Do I need to declare savings interest on my tax return?
Banks and building societies report your interest to HMRC automatically. If you're employed or receive a pension, HMRC will usually adjust your tax code to collect any tax due. You only need to declare it on a Self Assessment if you're already filing one, or if you owe more than £10,000 in tax on savings interest.
What is the starting rate for savings?
The starting rate for savings is a 0% tax band of up to £5,000 for people with low incomes. It's reduced by £1 for every £1 of income above your personal allowance. So if your total income is £17,570 or more, you won't benefit from it. This is separate from the Personal Savings Allowance.
Is ISA interest included in the Personal Savings Allowance?
No, ISA interest is completely separate and doesn't count towards your Personal Savings Allowance. All interest earned in an ISA is tax-free with no limit. The PSA only applies to interest from non-ISA savings accounts.
How is tax on savings interest collected?
Unlike in the past, banks no longer deduct tax from your interest. You receive your interest gross (without tax deducted). HMRC collects any tax due by adjusting your tax code if you're employed, or through Self Assessment if you file a tax return.
What happens if I exceed my Personal Savings Allowance?
Any interest above your PSA is taxed at your marginal rate: 20% for basic rate, 40% for higher rate, or 45% for additional rate taxpayers. HMRC will usually adjust your tax code to collect this automatically.
Should I use an ISA instead of a regular savings account?
If you're likely to exceed your Personal Savings Allowance, an ISA is usually better as all interest is tax-free. However, if your interest is within your PSA, a regular savings account with a higher rate might give you more. This calculator helps you compare.