Tax on savings interest calculator
Most savers pay no tax on interest, but higher rates and bigger balances have changed that. Enter your income and interest to see what is due.
How this is calculated
Any personal allowance not used by your other income covers interest first.
The starting rate for savings lets up to £5,000 of interest be tax free, but it is reduced pound for pound by other taxable income above the personal allowance.
The Personal Savings Allowance then covers £1,000 for basic rate taxpayers, £500 for higher rate and nothing for additional rate.
Interest above all of these is taxed at your income tax rate, sitting on top of your other income.
Rates used · 2026/27
| Starting rate for savings | up to £5,000 at 0% |
| Personal Savings Allowance, basic rate | £1,000 |
| Personal Savings Allowance, higher rate | £500 |
| Personal Savings Allowance, additional rate | £0 |
Last checked July 2026. Source: HMRC and gov.uk.
Worked example
On £45,000 of other income you are a basic rate taxpayer, so the first £1,000 of interest is covered by the Personal Savings Allowance. Of £2,500 of interest, £1,500 is taxed at 20%, so £300 of tax and £2,200 kept.
Common questions
Do I pay tax on savings interest?
Only on interest above your allowances. Many people pay none, but higher rate taxpayers with a few thousand pounds of interest often do.
Does ISA interest count?
No. Interest in an ISA is tax free and does not use your Personal Savings Allowance.
How is the tax collected?
Banks pay interest without deducting tax. HMRC usually collects it through your tax code, or you pay it through Self Assessment.
Is joint account interest split?
Usually half each, so each person's share counts against their own allowances.