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🇬🇧 UK-only · 2026/27 Tax Year · Free

Savings Interest Tax Calculator

With UK interest rates high, 2.6 million people now pay tax on their savings. Check if you owe HMRC based on your Personal Savings Allowance.

✓£1,000 / £500 PSA Limits✓Starting Rate included✓ISA protection calculation✓Free — no sign-up

Your Financial Details

Your salary, pension, or business profit before tax. Determines your PSA.

Enter this to see how much tax your ISA is saving you.

Estimated Tax Owed

£0.00

Total Interest: £900.00Net Interest: £900.00

Your Tax-Free Allowances

Personal Savings Allowance (PSA)£1,000
Starting Rate for Savings£0
Taxable Interest£0.00
Tax Rate Applied20%
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What Is the Personal Savings Allowance in 2026/27?

The Personal Savings Allowance (PSA) is the amount of interest you can earn on your cash savings every year without paying any tax. Your allowance depends entirely on your income tax band. Basic rate taxpayers get a £1,000 allowance, higher rate taxpayers get a £500 allowance, and additional rate taxpayers get no allowance at all. If you are unsure what your tax band is, you can check your total income and tax band using our Take-Home Pay Calculator.

Do I Need to Declare Savings Interest to HMRC?

Usually, no. Banks and building societies are legally required to report the interest they pay you directly to HMRC. If you owe tax because you breached your PSA, HMRC will typically adjust your tax code for the following year to collect the money automatically through your employer or pension provider. However, if your tax affairs are complex or you owe significant tax, you may need to register and use our Self Assessment Payment on Account Calculator to manage your tax bill.

The Starting Rate for Savings — Could You Pay 0% on All Your Interest?

If you are a low earner, you might be entitled to the "starting rate for savings" which gives you up to £5,000 of tax-free interest on top of your standard £1,000 PSA. You qualify for the full £5,000 if your other income (like a part-time wage or pension) is under your £12,570 Personal Allowance. For every £1 you earn over your Personal Allowance, the £5,000 starting rate goes down by £1. Our calculator above does this complex maths for you automatically.

ISA vs Savings Account — Which Saves You More Tax?

Because interest rates have been high, millions of people are paying tax on standard bank accounts. To protect your money, you should use an ISA. Interest earned inside an ISA is 100% tax-free and never counts towards your Personal Savings Allowance. You can lock away up to £20,000 a year to shield it from HMRC. Check exactly how much you can save by using our ISA Calculator.

Tax-free allowances

Frequently asked questions

How much savings interest can I earn before paying tax in 2026?
It depends on your income tax band. Basic rate taxpayers can earn £1,000 of interest tax-free each year. Higher rate taxpayers can earn £500. Additional rate taxpayers get £0 allowance. If you are a very low earner (under £17,570), you may also qualify for the £5,000 starting rate for savings.
What is the Personal Savings Allowance for basic and higher rate taxpayers?
The Personal Savings Allowance (PSA) is £1,000 for basic rate taxpayers (those earning roughly under £50,270). It drops to £500 for higher rate taxpayers (those earning up to £125,140).
Does ISA interest count towards my Personal Savings Allowance?
No. Any interest earned inside an ISA is completely tax-free and does not use up any of your Personal Savings Allowance. This makes ISAs the best place to store cash if you are close to breaching your PSA.
What is the starting rate for savings and who qualifies?
The starting rate for savings gives you up to £5,000 of tax-free interest, on top of your PSA. You only qualify for the full £5,000 if your other income (like your salary or pension) is below your standard Personal Allowance of £12,570. The £5,000 limit goes down by £1 for every £1 you earn over £12,570.
How does HMRC find out about my savings interest?
Banks and building societies automatically report the interest they pay you directly to HMRC at the end of each tax year. You do not usually need to do anything; HMRC will automatically adjust your tax code to collect any tax owed.
What happens if I earn more interest than my PSA?
If you exceed your allowance, you must pay tax on the excess interest at your usual income tax rate (e.g., 20%, 40%, or 45%). HMRC will usually collect this by changing your tax code for the following year.
Will my tax code change if I earn savings interest?
Yes, if you owe tax on your savings interest, HMRC will typically lower your tax code. This means they will take a little extra tax out of your monthly salary or pension to cover the tax you owe on your savings.
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