Savings Interest Calculator
Find out exactly how much interest your savings will earn over a set period, after Personal Savings Allowance and income tax.
How Savings Interest Calculator works
Personal Savings Allowance (PSA)
UK taxpayers receive a tax-free savings allowance: £1,000 for basic-rate taxpayers, £500 for higher-rate taxpayers, and £0 for additional-rate taxpayers. Interest within the PSA is received gross and is not taxable.
Tax on savings interest above the PSA
Interest above the PSA is taxed at your marginal income tax rate: 20% (basic), 40% (higher), or 45% (additional rate). Banks report interest to HMRC. Tax is collected via your Self Assessment return or by adjusting your PAYE tax code.
Avoiding savings tax with ISAs
All interest earned inside an ISA is tax-free regardless of amount. If your savings interest regularly exceeds your PSA, moving savings into a Cash ISA effectively gives you a tax-free wrapper on the excess.
Frequently asked questions
How much interest can I earn before paying tax?
Basic-rate taxpayers can earn up to £1,000 interest tax-free (Personal Savings Allowance). Higher-rate taxpayers: £500. Additional-rate taxpayers: £0 (all interest is taxable). Savings in ISAs are always tax-free.
Do I need to declare savings interest?
If interest is below your PSA, no action is needed. If above, HMRC will usually adjust your tax code automatically (PAYE) or you must declare it on Self Assessment. Banks report interest directly to HMRC.
What is a good savings interest rate in 2025?
With the Bank of England base rate at 4.5% in early 2025, easy-access savings accounts offer 3.5–5%. Fixed-rate bonds for 1–2 years offer 4–5.5%. ISAs typically track slightly below equivalent taxable accounts.
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