🧮 UK Calculator

Interest Calculator UK

Calculate compound interest, savings growth, and investment returns. Includes UK-specific features like Personal Savings Allowance tracking and ISA calculations.

📈 Bank of England Base Rate Context

The BoE base rate influences all UK savings rates. When base rate is high (e.g., 5.25%), savings accounts offer better returns. Compare your rate to the base rate to ensure you're getting a competitive deal.

📊 Compound Interest Calculator

Your starting amount
Regular monthly deposits
Use AER for accuracy

📐 Simple Interest Calculator

Simple interest is calculated only on the original principal, not on accumulated interest. Useful for comparing with compound interest or for loans.

🎯 Savings Goal Calculator

Calculate how much you need to save monthly to reach your financial goal, or how long it will take with your current savings rate.

Your target amount

⚖️ Interest Rate Comparison

Compare how different interest rates affect your savings over time. See the impact of even small rate differences.

💡 Understanding Compound Interest

Compound interest is often called "interest on interest" because you earn returns not just on your original deposit, but also on the interest you've already accumulated. This creates an exponential growth effect that becomes more powerful over time.

The Compound Interest Formula

A = P(1 + r/n)nt + PMT × [((1 + r/n)nt - 1) / (r/n)]

Where:

The Power of Compounding: A UK Example

Consider investing £10,000 at 5% AER with £200 monthly contributions:

Notice how the interest earned accelerates dramatically—this is the magic of compound interest!

Simple Interest vs Compound Interest

Simple interest is calculated only on the original principal. £10,000 at 5% simple interest earns exactly £500 every year, giving you £15,000 after 10 years.

Compound interest (monthly) on the same amount gives you £16,470 after 10 years—that's £1,470 more, or 29% extra interest, just from compounding!

The Rule of 72

Want to know how long it takes your money to double? Divide 72 by your interest rate:

🇬🇧 UK Savings Account Guide

Personal Savings Allowance (PSA)

The PSA lets you earn interest tax-free up to certain limits:

Tax Band Income Range (2025/26) Tax-Free Interest
Basic Rate (20%) £12,571 - £50,270 £1,000
Higher Rate (40%) £50,271 - £125,140 £500
Additional Rate (45%) Over £125,140 £0

Understanding AER vs Gross Rate

AER (Annual Equivalent Rate): Shows the true annual return including the effect of compounding. Use this to compare accounts fairly.

Gross Rate: The simple stated rate before compounding. A 5% gross rate compounded monthly = 5.12% AER.

Net Rate: Rate after tax (rarely used now since banks pay gross since 2016).

Types of UK Savings Accounts

Account Type Typical Rate (2024) Access Tax Status
Easy Access Savings 4.5% - 5.2% AER Instant PSA applies
Notice Accounts (90-day) 4.8% - 5.4% AER 90 days notice PSA applies
Fixed Rate Bonds (1 year) 4.8% - 5.3% AER Fixed term PSA applies
Cash ISA 4.5% - 5.3% AER Varies Always tax-free
Regular Saver 5.0% - 8.0% AER Usually 12 months PSA applies

ISA Allowance (2025/26)

The annual ISA allowance is £20,000, which can be split between:

All interest and growth in ISAs is completely tax-free forever, regardless of amount.

✅ 7 Tips for Maximising UK Savings Interest

❌ 7 Common Savings Interest Mistakes

❓ Frequently Asked Questions

How is compound interest calculated on UK savings? +
Compound interest is calculated using the formula A = P(1 + r/n)^(nt), where P is your principal (initial deposit), r is the annual interest rate as a decimal, n is how many times interest compounds per year (12 for monthly, 365 for daily), and t is the number of years. Most UK savings accounts compound monthly or daily. Banks display the AER (Annual Equivalent Rate) which shows your true annual return including compounding—use this to compare accounts fairly.
What is a good savings interest rate in the UK in 2025/26? +
As of late 2024, competitive UK savings rates are: Easy access accounts 4.5-5.2% AER, notice accounts 4.8-5.4% AER, 1-year fixed bonds 4.8-5.3% AER, and Cash ISAs 4.5-5.3% AER. The Bank of England base rate (5.25% in late 2024) influences all savings rates—when it rises, savings rates typically follow. A "good" rate is one that matches or beats inflation and is within 0.5% of the best available rates in its category.
What is the Personal Savings Allowance in the UK? +
The Personal Savings Allowance (PSA) allows UK taxpayers to earn interest tax-free up to: £1,000 for basic rate taxpayers (20% tax band), £500 for higher rate taxpayers (40% tax band), and £0 for additional rate taxpayers (45% tax band). Interest above these limits is taxed at your marginal rate. Note: ISA interest is completely separate and always 100% tax-free, regardless of amount. The PSA only applies to non-ISA savings interest.
What is the difference between AER and gross interest rate? +
AER (Annual Equivalent Rate) includes the effect of compounding, showing your true yearly return if interest were compounded and credited once per year. Gross rate is the simple stated rate before compounding. For example, a 5% gross rate compounded monthly has an AER of 5.12%. UK banks must display AER by law so you can compare accounts on equal terms. Always use AER when comparing savings accounts.
How much interest will I earn on £10,000 in the UK? +
At 5% AER with monthly compounding, £10,000 earns approximately £511.62 in the first year. Over 5 years (no additional deposits), you'd have £12,834 (£2,834 interest). Over 10 years, £16,470 (£6,470 interest). In an ISA, all this interest is tax-free. In a standard savings account, basic rate taxpayers can earn up to £1,000 per year tax-free under the Personal Savings Allowance—you'd only exceed this with savings over about £20,000 at 5%.
Should I choose fixed-rate or easy access savings in the UK? +
Fixed-rate bonds typically offer 0.3-0.7% higher interest than easy access accounts but lock your money for 1-5 years. Choose fixed if: you definitely won't need the money before maturity, you want to lock in current high rates before they potentially drop, or you prefer guaranteed returns. Choose easy access if: you might need the money, you believe interest rates will rise further, or you need an emergency fund. Many people use both—easy access for emergencies, fixed for longer-term goals.
How does the ISA allowance work for savings interest? +
The ISA allowance is £20,000 per tax year (2025/26), which can be split between Cash ISAs, Stocks & Shares ISAs, Innovative Finance ISAs, and Lifetime ISAs (£4,000 sub-limit). All interest earned in any ISA is completely tax-free forever—it doesn't count toward your Personal Savings Allowance. You can pay into multiple types of ISA in one year, but only one Cash ISA. You can transfer between providers without affecting your allowance. Unused allowance doesn't carry forward—use it before 5 April or lose it.
What is the Rule of 72 for investment growth? +
The Rule of 72 is a quick mental calculation to estimate how long it takes for money to double at compound interest. Divide 72 by your annual interest rate to get the approximate years. At 6% interest, money doubles in about 12 years (72÷6=12). At 4%, it takes 18 years. At 8%, just 9 years. This helps set realistic expectations—if you want £100,000 from £50,000 at 5% with no contributions, you're looking at about 14 years (72÷5≈14.4).

🔗 Official UK Resources

🏛️ Bank of England

Official base rate decisions that influence all UK savings rates. Updated 8 times per year by the Monetary Policy Committee.

BoE Base Rate →

📊 MoneyHelper

Free government-backed financial guidance including savings advice, ISA information, and retirement planning.

MoneyHelper Savings →

💷 HMRC - Savings Interest

Official guidance on tax on savings interest, Personal Savings Allowance, and how to report interest.

HMRC Savings Tax →

🛡️ FSCS Protection

Financial Services Compensation Scheme - confirms your savings are protected up to £85,000 per banking group.

FSCS Savings Protection →

🏦 NS&I

National Savings & Investments - 100% government-backed savings including Premium Bonds and fixed-rate bonds.

NS&I Savings →

📋 FCA

Financial Conduct Authority - check if your savings provider is authorised and regulated.

FCA Savings Guide →

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About This Interest Calculator

This comprehensive UK interest calculator is designed specifically for British savers and investors. It handles compound interest, simple interest, savings goals, and rate comparisons—all with UK-specific features like Personal Savings Allowance tracking and ISA considerations.

The calculator uses the standard compound interest formula with adjustments for different compounding frequencies (daily, monthly, quarterly, annual). It correctly calculates the effective Annual Equivalent Rate (AER) so you can see your true returns. The Personal Savings Allowance tracker helps you understand whether your interest will be taxable.

Created and maintained by Mustafa Bilgic, this tool is part of the UK Calculator suite—free, privacy-focused financial calculators designed specifically for United Kingdom residents. All calculations are performed locally in your browser; no personal or financial data is sent to any server.

Disclaimer: This calculator is for illustrative purposes only and should not be considered financial advice. Interest rates change frequently, and actual returns may vary. Tax rules are subject to change. For personalised financial advice, consult a qualified financial adviser authorised by the FCA.

✓ Expert Reviewed — This calculator is reviewed by our team of financial experts and updated regularly with the latest UK tax rates and regulations. Last verified: January 2026.

Last updated: January 2026 | Verified with latest UK rates