Savings Interest Tax Calculator (UK)
Enter your other income and the interest you earn to see how much of it is tax-free.
| Part of your interest | Amount | Tax |
|---|---|---|
| Personal Savings Allowance (basic rate taxpayer) | £1,000.00 | £0.00 |
| Taxed at 20% | £500.00 | £100.00 |
| Total | £1,500.00 | £100.00 |
Interest in an ISA is always tax-free (the allowance is £20,000 a year). Savings interest is taxed at UK rates, including for people who live in Scotland.
How savings interest is taxed
You can earn some interest without paying tax, thanks to three allowances that apply in order:
| Allowance | How much | Who gets it |
|---|---|---|
| Personal Allowance | £12,570 | Any unused part covers savings interest |
| Starting rate for savings | Up to £5,000 | If your other taxable income is under £17,570. Every £1 above the Personal Allowance reduces it by £1 |
| Personal Savings Allowance | £1,000 / £500 / £0 | Basic / higher / additional rate taxpayers |
Interest above those allowances is taxed at 20%, 40% or 45% depending on your income. This is the same in Scotland, because savings are taxed at UK rates.
How to avoid tax on savings
- Use an ISA. Interest is always tax-free and you can save up to £20,000 a year.
- Spread savings with a partner if one of you pays a lower rate of tax.
- Use the allowances above before paying tax.
Paying any tax due
Banks pay interest without deducting tax. If you owe tax, HMRC usually collects it by adjusting your tax code, or through Self Assessment if the amount is larger.
Planning your savings? Try the compound interest calculator.
Sources: GOV.UK: Tax on savings interest, GOV.UK: ISAs. Figures last checked on 8 October 2026.
Frequently asked questions
How much savings interest is tax-free?
Basic rate taxpayers can earn £1,000 a year tax-free, higher rate taxpayers £500 and additional rate taxpayers nothing. Some people also get up to £5,000 through the starting rate for savings.
Do I pay tax on ISA interest?
No. Interest in an ISA is tax-free and does not count towards your Personal Savings Allowance.
How much do I need to save to earn £1,000 of interest?
At 4% you need about £25,000 in savings. At 5% it is £20,000.
Do I need to tell HMRC about savings interest?
If you are over your allowances, HMRC will normally adjust your tax code or ask for a Self Assessment return. If you are within your allowances you do not need to do anything.
More from UK Answers
Figures are for the 2026/27 tax year from official sources and are estimates for guidance only, not financial or legal advice. Printed from ukanswers.co.uk.