Savings Interest Tax Calculator UK 2026
Calculate tax on savings interest after the Personal Savings Allowance. Basic rate taxpayers get £1,000 PSA, higher rate £500, additional rate £0 for 2026/27.
Personal Savings Allowance 2026/27
- Basic rate taxpayers (income up to £50,270): £1,000 PSA
- Higher rate taxpayers (£50,271–£125,140): £500 PSA
- Additional rate taxpayers (above £125,140): £0 PSA
- Starting rate for savings: up to £5,000 at 0% if non-savings income below £17,570
- Cash ISA interest: always tax-free, does not use PSA
See How Much Tax You Owe on Savings Interest
Enter your income and savings interest to calculate your PSA entitlement and any tax due for 2026/27.
Savings Interest Tax Calculator 2026/27
PSA: basic rate £1,000, higher rate £500, additional rate £0. Starting rate: up to £5,000 at 0% if non-savings income below £17,570. Not financial advice.
How Savings Interest Is Taxed
Since April 2016, UK banks and building societies pay interest gross. HMRC collects any tax owed by adjusting your PAYE tax code — most savers with interest below their PSA do not need to take any action. If you earn more than £10,000 in savings interest outside an ISA, you must declare it via Self Assessment.
The starting rate for savings is an additional 0% band for those with low non-savings income. If your salary, pension, and other non-savings income is below £17,570 (personal allowance plus £5,000 starting rate band), you may earn up to £5,000 in savings interest at 0%, on top of your PSA. This is especially relevant for retirees living partly on savings.
Frequently Asked Questions
1. How much savings interest is tax-free in the UK 2026?
For 2026/27: basic rate taxpayers can earn up to £1,000 in savings interest tax-free (Personal Savings Allowance). Higher rate taxpayers get £500. Additional rate taxpayers (income above £125,140) receive no PSA. If your non-savings income is below £17,570, you may also qualify for up to £5,000 in interest at 0% via the starting rate for savings band. Cash ISA interest is permanently tax-free and does not use any allowance.
2. What is the Personal Savings Allowance?
The PSA is a tax-free interest allowance introduced in April 2016. Basic rate taxpayers receive £1,000 PSA; higher rate taxpayers receive £500; additional rate taxpayers receive £0. It covers interest from bank accounts, building societies, peer-to-peer lending, gilts, and most bonds. It does not apply to cash ISA interest, which is already fully tax-free.
3. Do I pay tax on ISA interest?
No. All interest earned inside a cash ISA is completely free from UK income tax. It does not count towards your PSA — it is simply not taxable. This makes cash ISAs the most efficient home for savings interest, particularly for higher rate and additional rate taxpayers with limited or no PSA.
4. How is bank interest taxed in the UK?
Since April 2016, banks pay interest gross (without deducting tax). HMRC collects any tax due by adjusting your PAYE tax code. If you earn over £10,000 in interest, or are self-employed, you must declare it via Self Assessment. HMRC receives interest data directly from banks and building societies.
5. Do I need to declare savings interest to HMRC?
No action is needed if your interest is below your PSA — HMRC adjusts your tax code automatically. You must file Self Assessment if total savings interest (outside ISAs) exceeds £10,000 in a tax year, or if you are already required to file for other reasons such as self-employment or rental income.