UK Savings Interest & Personal Savings Allowance Calculator
Check whether your bank interest breaches HMRC thresholds. Calculates the £1,000 / £500 / £0 Personal Savings Allowance, the £5,000 Starting Rate for Savings, and reveals the exact tax drag compared to a tax-free Cash ISA.
⚙️ Income & Savings Details
Used to determine your tax bracket and Starting Rate for Savings eligibility.
Exclude balances held inside Cash ISAs (which are 100% tax-free).
You earned £1,200 in gross savings interest. With a £1,000 Personal Savings Allowance, only £200 is taxable at 20%.
Due to tax drag, a tax-free Cash ISA paying 4.64% AER delivers the exact same net cash return as your 4.80% bank account.
📊 Maximum Tax-Free Savings Capacity At 4.80% AER
| Taxpayer Band | PSA Allowance | Max Cash Before Tax | Tax Rate on Excess |
|---|---|---|---|
| Basic Rate (20%) | £1,000 | £20,833 | 20% |
| Higher Rate (40%) | £500 | £10,417 | 40% |
| Additional Rate (45%) | £0 | £0 | 45% |
How HMRC Taxes Savings Interest (2025/2026 Rules)
Since April 2016, UK banks pay interest without deducting tax at source. Instead, individuals are granted a Personal Savings Allowance (PSA) based on their total taxable income:
- Basic Rate Taxpayers (Earn up to £50,270): First £1,000 of interest is 100% tax-free.
- Higher Rate Taxpayers (£50,271 to £125,140): First £500 of interest is 100% tax-free.
- Additional Rate Taxpayers (Over £125,140): No allowance (£0). All interest is taxed at 45%.
The Starting Rate for Savings Trap: If your non-savings income (such as salary or state pension) is below £17,570 (£12,570 personal allowance + £5,000), you can also earn up to £5,000 of interest tax-free. Every £1 of salary above £12,570 reduces this starting rate by £1.
Frequently Asked Questions
Do Cash ISAs count towards my Personal Savings Allowance?
No. Interest earned inside a Cash ISA or Stocks & Shares ISA is completely exempt from UK income tax and does not consume any portion of your £1,000 or £500 PSA.
How do joint savings accounts work for married couples?
Interest from joint bank accounts is split equally (50/50) between both account holders. Each partner can apply their own Personal Savings Allowance to their half of the interest.