Saving money is only half the battle — understanding how your savings are taxed is key to making the most of your money.
Our savings tax calculator helps you see exactly how much tax you might owe on the interest you earn, so you can plan better and keep more of your money working for you.
Work out your savings tax
Your tax breakdown
Personal Savings Allowance:
Interest Earned: £
Taxable Interest: £
Applicable Tax Rate:
Tax Due: £
Comparison Table
| Savings Amount (£) | Interest Earned (£) | Taxable Interest (£) | Tax Due (£) | Tax Rate |
|---|
Understanding the Personal Savings Allowance (PSA)
The Personal Savings Allowance (PSA) is a valuable tax benefit available to UK taxpayers. Depending on your income, you may be able to earn a certain amount of interest tax-free:
| Taxpayer type | Salary range | Personal savings allowance (PSA) |
|---|---|---|
| Basic rate taxpayers | £12,571 – £50,270 | £1,000 |
| Higher rate taxpayers | £50,271 – £125,140 | £500 |
| Additional rate taxpayers | £125,140+ | None (all interest taxable) |
Understanding where you fall in these brackets can help you make informed decisions about your savings.
Boost your savings rate
Interest on savings accounts from high street banks is typically pitiful. You can boost your savings rate by using a specialist savings account or digital provider and still enjoy the same FSCS protection, while watching your money grow faster.
See our carefully curated list of the top easy access savings accounts.
Get tax-free savings with ISAs
Our calculator shows you the potential tax on your savings interest. It’s worth noting that savings held within an Individual Savings Account (ISA) are completely tax-free regardless of your income bracket.
ISAs are a fantastic way to grow your savings without the worry of tax liabilities. If you’re not already maximising your ISA allowance, it might be time to consider moving some of your savings.
Our top recommended Cash ISA:
Discover the Plum Cash ISA
Give your savings a long-term Plum boost and don't pay a penny of tax on any of it up to £20,000 a year.
With a Plum Cash ISA you'll get 4.03% AER on your savings.
Our top recommended Stocks and Shares ISA:
Get a Trading 212 ISA
The Trading 212 ISA offers tax free savings, with an interest rate of up to 3.8% AER.
And if you open an acocunt via our link and enter promo code "MSA212" you'll get a free fractional share worth up to £100 to get you started
For Invest and ISA accounts, eligible UK customers are also covered by the Financial Services Compensation Scheme (FSCS) up to £120,000 per person. T&Cs apply.
How the calculator works
Our easy-to-use calculator allows you to:
Select your salary range: Choose the range that best describes your income. This helps us determine your applicable PSA and tax rate.
Enter your savings amount: Input how much you have saved, and see a detailed breakdown of the interest you might earn.
Adjust the Interest rate: Use our slider to adjust the Annual Equivalent Rate (AER) and instantly see how different rates affect your potential tax liability.
Compare scenarios: View a comparison table that shows tax implications for common savings amounts—including your actual savings—to help you see the bigger picture.
Why knowing your savings tax matters
By understanding the tax you might owe on your savings, you can:
Plan ahead
Forecast your savings growth more accurately and adjust your strategy to minimize tax liabilities.
Maximize your tax-free allowances
Make the most of your PSA and ISAs to keep more money in your pocket.
Make informed investment decisions
Use this knowledge to decide whether shifting funds into tax-free vehicles might be right for you.
Ready to take control of your savings?
Use our savings tax calculator to discover how much tax you might owe and gain clarity on your savings strategy. Whether you’re just starting out or looking to optimize your finances, understanding your tax position is a critical step toward financial confidence and long-term success.
Frequently Asked Questions (FAQ)
1. What is the Personal Savings Allowance (PSA)?
The PSA allows UK taxpayers to earn a certain amount of interest tax-free. Basic rate taxpayers get a £1,000 allowance, higher rate taxpayers get £500, and additional rate taxpayers do not have an allowance.
2. Do I need to report my savings interest to HMRC?
If your interest exceeds your PSA, your bank or building society will report it to HMRC. You may need to declare it on a Self Assessment tax return or have it collected through your tax code.
3. How can I legally reduce the tax on my savings?
You can use tax-free savings accounts like ISAs, distribute savings between partners to maximize allowances, or invest in tax-efficient options such as Premium Bonds.
4. Does my salary include bonuses when calculating my PSA?
Yes, your total taxable income—including salary, bonuses, and other earnings—determines your PSA and tax rate.
5. Are joint savings accounts taxed differently?
Interest earned on a joint account is typically split equally between account holders, and each person’s share is taxed based on their individual PSA and tax band.
6. What happens if my savings interest pushes me into a higher tax bracket?
If your total income, including savings interest, moves you into a higher tax bracket, you may receive a lower PSA or lose it entirely. Our calculator helps you estimate the impact.
7. How often is savings tax deducted?
Banks don’t deduct tax at source anymore, so if you owe tax on interest, HMRC will collect it via your tax code or a Self Assessment tax return.
8. Are ISAs the best way to save tax-free?
ISAs offer tax-free interest regardless of income, making them a great option. However, high-interest non-ISA accounts may still be beneficial if your PSA covers your interest earnings.