Savings Interest Tax Calculator
Find out whether you will pay tax on your savings interest in 2026/27, and how much, after your Personal Allowance, the starting rate for savings and the Personal Savings Allowance.
A basic rate taxpayer earns £30,000 in wages and £2,000 in savings interest:
- Wages use up the whole £12,570 Personal Allowance, leaving £17,430 taxable
- The starting rate for savings is £5,000 − £17,430, which is nothing, so there is no 0% band
- The £1,000 Personal Savings Allowance covers the first £1,000 of interest
- The other £1,000 is taxed at 20%, giving £200 of tax
If the wages were only £14,000, the taxable wages would be £1,430 and £3,570 of the starting rate band would be left. The same £2,000 of interest would then be entirely tax free.
| Allowance | Amount |
|---|---|
| Personal Allowance | £12,570, used up by other income first |
| Starting rate for savings | Up to £5,000 at 0%, reduced £1 for £1 by other taxable income |
| Personal Savings Allowance, basic rate | £1,000 |
| Personal Savings Allowance, higher rate | £500 |
| Personal Savings Allowance, additional rate | £0 |
| Savings tax rates | 20% basic, 40% higher, 45% additional |
From April 2027 the government plans to raise tax on savings income by 2 percentage points at each rate. A Cash ISA keeps interest completely tax free.
How much savings interest is tax free in the UK?
Most people can earn some interest tax free. Basic rate taxpayers have a £1,000 Personal Savings Allowance, higher rate taxpayers £500 and additional rate taxpayers nothing. On top of that, if your other income is low you may get up to £5,000 of interest at the starting rate for savings, and any unused Personal Allowance also counts. Interest in an ISA is always tax free and doesn't use any of these allowances.
How does the starting rate for savings work?
The starting rate for savings is a 0% band of up to £5,000. It is reduced by £1 for every £1 of your other taxable income above the Personal Allowance. With a salary of £15,000 your taxable income is £2,430, so £2,570 of the band is left. Once your other income is more than £17,570, the starting rate is gone.
Do I need to tell HMRC about savings interest?
If your interest is within your allowances, you generally don't need to do anything. If you owe tax on it, HMRC will normally collect it by changing your tax code, or you may need to report it through Self Assessment if the amounts are large. Banks and building societies send interest to HMRC each year, so it is usually known to them already.
Is savings interest taxed at the same rates as my salary?
The rates are the same in 2026/27: 20% for basic rate, 40% for higher rate and 45% for additional rate. From April 2027 the government has announced that tax rates on savings income will go up by 2 percentage points. Savings interest is always treated as the top slice of your income, so it is taxed after your wages.
Does a joint savings account double the allowance?
Interest on a joint account is normally split equally between the two account holders, and each person has their own Personal Savings Allowance. A couple with the same tax band can therefore earn twice as much interest before any tax is due. Enter half of the interest to see the position for one person.
Does this calculator work for Scottish taxpayers?
It gives a close estimate. Scottish taxpayers pay tax on savings interest at the same rates as the rest of the UK, but their wages are taxed on different bands, which can shift where the higher rate begins. If your income is near a band boundary, check the result against your HMRC tax calculation.
Sources: GOV.UK: How much of your interest is tax free and Income Tax rates and Personal Allowances.