Find out whether you owe tax on savings interest in 2026/27 and how much you keep. With £20,000 at 4.00% you earn £800 of interest; a basic-rate taxpayer earning £40,000 pays no tax because it is within the £1,000 Personal Savings Allowance.
Savings Interest Tax Calculator 2026/27
Interest after the Personal Savings Allowance and starting rate for savings
- Interest for the year
- –
- Personal Savings Allowance
- –
- Starting rate for savings used
- –
- Interest taxed
- –
- Interest after tax
- –
For taxpayers in England, Wales and Northern Ireland. Savings income is taxed at UK rates everywhere, but Scottish taxpayers’ bands can differ. ISA interest is tax-free and not included.
Three tax-free allowances for interest
- Personal Allowance: any part of your £12,570 allowance not used by other income covers interest first.
- Starting rate for savings: up to £5,000 of interest at 0%, reduced by £1 for every £1 of other taxable income above the Personal Allowance, so it is gone once other income passes £17,570.
- Personal Savings Allowance: £1,000 for basic-rate taxpayers, £500 for higher-rate taxpayers and nothing for additional-rate taxpayers.
Examples for 2026/27
| Other income | Interest | Allowance | Tax on interest |
|---|---|---|---|
| £40,000 | £800 | £1,000 PSA | £0 |
| £60,000 | £2,000 | £500 PSA | £600 (40% of £1,500) |
| £12,000 | £3,000 | £570 PA + £5,000 starting rate | £0 |
| £30,000 | £1,600 | £1,000 PSA | £120 (20% of £600) |
Interest above your allowances is taxed at 20%, 40% or 45% depending on your band. From April 2027 the government plans to raise savings tax rates to 22%, 42% and 47%, so the same interest could cost more next year.
How tax is collected
Banks pay interest gross. If you owe tax and are employed, HMRC usually collects it through your tax code; otherwise you report it through Self Assessment. Interest inside a cash ISA is tax-free and does not use your allowances.
FAQs
Does the allowance apply per account?
No. It covers all interest you earn across banks and building societies in the tax year, outside ISAs.
Is interest counted when it is paid or earned?
Interest is taxed in the tax year it is paid or credited to you. Fixed-term bonds that pay interest at maturity are taxed in the year they pay out unless they pay annually.
Related calculators
Sources
- LITRG: Tax on savings income (2026/27) · updated 6 April 2026
- GOV.UK: Tax on savings interest
Figures current as of 12 October 2026
Each formula is checked against a separate test sheet with at least three worked examples. Results are estimates based on the numbers you enter and the published rules; your actual figures may differ. This is general information, not financial or tax advice.
Spotted a mistake? Contact us and we will fix it and update the date above.