Savings Interest Tax Calculator
Calculate tax on savings interest above your Personal Savings Allowance. See max tax-free savings.
Last updated: April 2026 · Source: GOV.UK
Annual Interest
£2,250.00
Tax-Free (PSA)
£1,000.00
Tax on Interest
£250.00
Net Interest
£2,000.00
Your Personal Savings Allowance: £1,000.00 (20% taxpayer)
Max tax-free savings at 4.5%: £22,222.22
Tax due: £1,250.00 x 20% = £250.00 — reported via self-assessment or PAYE tax code adjustment.
Disclaimer
This calculator is provided for informational purposes only and should not be considered as financial or tax advice. All calculations are performed locally in your browser — no personal data is collected or sent to our servers. Rates and thresholds are sourced from HMRC and GOV.UK and are updated for the current tax year. Always verify results with HMRC or consult a qualified professional before making financial decisions.
How It Works
The Personal Savings Allowance (PSA) lets you earn tax-free interest each year: £1,000 for basic-rate taxpayers (20%), £500 for higher-rate taxpayers (40%), and £0 for additional-rate taxpayers (45%). Interest above the PSA is taxed at your marginal income tax rate. The PSA applies to interest from bank and building society accounts, NS&I (except Premium Bond prizes which are always tax-free), and peer-to-peer lending.
The calculation totals all taxable interest across your savings accounts, subtracts the PSA for your tax band, and applies the appropriate tax rate to the excess. Your tax band is determined by total income including salary, pension, rental income, and dividends. If adding savings interest pushes you from basic into higher rate, the portion in each band is taxed separately. ISA interest is excluded entirely as it does not count toward the PSA threshold.
The starting rate for savings provides an additional £5,000 tax-free band for those with non-savings income below £17,570. For every £1 of non-savings income above £12,570, the starting rate band reduces by £1. Someone earning £14,000 salary gets a £3,570 starting rate band (£17,570 - £14,000) plus the £1,000 PSA, allowing £4,570 of interest tax-free. Retirees with only State Pension income often benefit significantly from this starting rate band.
Tax on £2,800 savings interest for a higher-rate taxpayer
- Total savings interest across all accounts: £2,800/year
- Tax band: higher rate (salary £55,000)
- Personal Savings Allowance at higher rate: £500
- Taxable interest: £2,800 - £500 = £2,300
- Tax due at 40%: £2,300 x 40% = £920 (collected via self-assessment or PAYE code adjustment)
Source: GOV.UK
Frequently Asked Questions
- What does the Savings Interest Tax Calculator do?
- Calculate tax on savings interest above your Personal Savings Allowance. See max tax-free savings. All calculations are performed in your browser using official UK rates and thresholds.
- Is this calculator suitable for financial decisions?
- This calculator provides estimates for guidance only. Investment returns are not guaranteed and your capital is at risk. Consider seeking independent financial advice before making investment decisions.
- Are ISA contributions tax-free?
- Yes. The annual ISA allowance for 2025/26 is £20,000. Any interest, dividends or capital gains within an ISA are completely tax-free.