Savings Interest Tax Calculator
Calculate tax on your savings interest using the Personal Savings Allowance (PSA). See how much of your interest is tax-free and what you might owe.
Basic Rate (20%)
£1,000
Tax-free interest
Higher Rate (40%)
£500
Tax-free interest
Additional Rate (45%)
£0
No PSA
Used to determine your tax band and PSA
Tax Due
£250
Per year
Your Interest
£2,250
Per year
Net Interest
£2,000
After tax
Tax Collection
If you owe tax on savings interest, HMRC will usually adjust your tax code so you pay through PAYE. You typically don't need to do anything - your bank reports interest to HMRC automatically.
| Interest Rate | Basic Rate (£1,000 PSA) | Higher Rate (£500 PSA) |
|---|---|---|
| 3% | £33,333 | £16,667 |
| 4% | £25,000 | £12,500 |
| 4.5% | £22,222 | £11,111 |
| 5% | £20,000 | £10,000 |
| 5.5% | £18,182 | £9,091 |
| 6% | £16,667 | £8,333 |
Tip: If you have more savings than the amounts above, consider using an ISA for the excess to keep all your interest tax-free.
Frequently Asked Questions
What is the Personal Savings Allowance (PSA)?
The Personal Savings Allowance lets you earn up to £1,000 in savings interest tax-free if you're a basic rate taxpayer, or £500 if you're a higher rate taxpayer. Additional rate taxpayers (income over £125,140) don't get any PSA.
Do I need to declare savings interest on my tax return?
Most people don't need to do anything - banks report interest to HMRC automatically. If your interest exceeds your PSA, HMRC will adjust your tax code to collect the tax due. You only need to submit a Self Assessment if you have significant untaxed income or HMRC requests one.
Is ISA interest taxable?
No, interest earned in a Cash ISA or Stocks and Shares ISA is completely tax-free, regardless of how much you earn. The current ISA allowance is £20,000 per year (2026/27). This is why ISAs are often more tax-efficient for higher earners.
What is the starting rate for savings?
If your non-savings income is below £17,570 (£12,570 Personal Allowance + £5,000), you may be entitled to an additional £5,000 of tax-free savings interest. This 'starting rate for savings' reduces by £1 for every £1 of income above £12,570.
How do joint accounts work for tax purposes?
Interest from joint accounts is split equally between account holders for tax purposes. Each person then uses their own PSA against their share of the interest. This can be beneficial if one partner is a basic rate taxpayer and the other is higher rate.
What happens if I exceed my PSA?
If your savings interest exceeds your PSA, you'll pay tax on the excess at your marginal rate (20%, 40%, or 45%). HMRC usually collects this by adjusting your tax code if you're employed, spreading the payment across the tax year.