Savings Interest Tax Calculator 2026/27

Savings Interest Tax Calculator 2026/27

How tax free interest works

Your result applies unused personal allowance, the £5,000 starting rate band where eligible, then the Personal Savings Allowance.

Savings interest uses UK wide thresholds, including for Scottish taxpayers.

Layers used

£3,000 interest broken down

PSA

£1,000

Taxed

£2,000

Tax breakdown

Savings basic rate

20% on £2,000

£400

PSA by tax band

Basic rate

£1,000

Up to £50,270 income

Higher rate

£500

£50,270 to £125,140

Additional rate

£0

Above £125,140

Where your tax goes

on £400 savings interest tax

This is an estimate. The government does not set aside your exact tax for these areas.

21%

£85

Welfare

≈ 1 weeks of welfare per citizen

21%

£84

Health

≈ 9 days of NHS care (per citizen)

12%

£48

State Pensions

≈ 0 weeks of state pension

11%

£43

National Debt Interest

10%

£41

Education

≈ 1 school days funded

6%

£22

Defence

See the full UK budget →

+ £78 across public order & safety, transport, business & industry and 6 more

Estimates onlyShow

Calculations use HMRC published rates for education and illustration. They are not regulated financial, tax, or legal advice. Verify against your own tax position before filing or making financial decisions.

Background reading

UK savings interest tax in 2026/27

Show

The UK gives most savers some interest tax free through three layered allowances. Your unused personal allowance comes off first, then the £5,000 starting rate band (subject to taper), then the Personal Savings Allowance, £1,000 at basic rate, £500 at higher, nothing at additional. With base rates higher than for most of the last decade, even basic rate savers can find their PSA used up by a single account.

  • How much savings interest is tax free in 2026/27?

    Three layers stack up: (1) the £5,000 starting rate band at 0%, available if your non-savings income is under £17,570; (2) the Personal Savings Allowance, £1,000 (basic rate), £500 (higher rate), £0 (additional rate); (3) any unused personal allowance.

  • Why does my savings allowance shrink at higher rate?

    The Personal Savings Allowance was designed as a tax-equalisation measure. Basic rate gets £1,000 because £1,000 × 20% = £200, the same tax that would have been collected. Higher rate gets £500 (×40% = £200), and additional rate gets nothing because they're already paying the top rate.

  • Are ISAs better than ordinary savings accounts?

    If your interest will exceed your PSA, yes. ISA interest is fully tax free regardless of band, no allowance, no reporting on Self Assessment. With base rates rising, even basic rate taxpayers can find their PSA used up quickly.

  • Do banks deduct tax from my savings interest automatically?

    No. Since April 2016 banks pay interest gross. You owe any tax via PAYE adjustment or Self Assessment. HMRC gets the data from banks each year and adjusts your tax code.

Privacy, sources & last reviewed1 March 2026 · Show

Privacy and independence

Built and maintained by Afterax as an independent educational UK tax calculator project. Calculations run in your browser using HMRC 2026/27 rates. Inputs can be saved on this device and included in share links.

Sources

Bands, thresholds and reliefs come from official sources and are checked when a Budget or in-year change is announced.

Last reviewed 1 March 2026 · updated for 2026/27 · view changelog →