⚠ Over 2 million pensioners now pay tax on their savings
Tax on Savings Interest Calculator 2026/27
The Personal Savings Allowance hasn't risen since 2016, while interest rates and incomes have. So more savers are quietly paying tax on their interest for the first time. Enter your income and your interest below to see exactly what you'll owe — the £5,000 starting rate, your Personal Savings Allowance, and the Scotland rule are all handled. No signup.
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How much tax will you pay on your savings interest?
2026/27 rules · updates as you type
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£
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Scottish rates apply to your salary and pensions only. Savings interest is taxed at UK rates (20/40/45%) everywhere in the UK — so the Scotland toggle changes your total bill, but not the tax on the interest itself.
£0
tax due on your savings interest this year
Your Personal Savings Allowance
£1,000
basic-rate taxpayer
Interest taxed at 0% this year
£0
allowance + starting rate + PSA
Interest that gets taxed
£0
Total income tax · all income
£0
£0
of savings you could hold before paying any tax on the interest, at your rate
Tax-free line
Your interest vs your tax-free headroom£0
Estimate for the 2026/27 tax year, England/Wales/NI or Scotland as selected. Covers the personal allowance, the £5,000 starting rate for savings, and the Personal Savings Allowance. Assumes the standard personal allowance and treats "other income" as non-savings income; it does not model dividends, Gift Aid, Marriage Allowance, or the High Income Child Benefit Charge. ISA interest is tax-free and should be left out. Not financial advice.
✦ The full picture
Do you pay tax on savings interest?
Interest from an ordinary savings account is taxable income — but most people pay nothing on it, because three separate allowances usually soak it up before any tax is due. The reason more savers are suddenly getting caught isn't a new tax. It's that two of those allowances have been frozen for years while interest rates and incomes climbed. HMRC now expects more than 2 million pensioners alone to pay tax on their savings in 2026/27.
The calculator above applies the three allowances in the right order, so you can see exactly where your interest lands. Here's what each one does.
The squeeze in one line
The Personal Savings Allowance has been £1,000 since 2016 and has never risen. The personal allowance is frozen at £12,570 until April 2031. Rates on easy-access savings have gone from near-zero to 4–5%. Same allowances, far more interest — so the tax quietly arrives.
The three allowances, in the order they apply
Savings interest is stacked on top of your other income, and taxed only after these three have been used up:
Your personal allowance (£12,570). If your other income doesn't use all of it, the leftover covers savings interest at 0%.
The starting rate for savings (up to £5,000 at 0%). Aimed at people with low non-savings income. It's reduced by £1 for every £1 of income above your personal allowance — so it fades out once your other income reaches about £17,570.
The Personal Savings Allowance (PSA). £1,000 if you're a basic-rate taxpayer, £500 if higher-rate, £0 if additional-rate. Anything above these is taxed at your normal rate — 20%, 40% or 45%.
Put together, someone whose only income is savings interest can receive up to £18,570 tax-free (£12,570 + £5,000 + £1,000). The more you earn or draw from pensions, the smaller that figure gets — which is exactly how a modest saver with a full-time income can owe tax on a few hundred pounds of interest.
The key numbers for 2026/27
Allowance / band
2026/27
Personal allowance (frozen to April 2031)
£12,570
Starting rate for savings (0%)
up to £5,000
Personal Savings Allowance — basic rate
£1,000
Personal Savings Allowance — higher rate
£500
Personal Savings Allowance — additional rate
£0
Savings taxed at basic rate
20%
Savings taxed at higher rate
40%
Savings taxed at additional rate
45%
Scotland: your salary is Scottish, your savings are not
This one trips up a lot of calculators. Scotland sets its own income tax bands, but they apply only to non-savings, non-dividend income — your salary, pensions and rent. Interest on savings is taxed at the UK rates and bands (20/40/45%) right across the UK, and your Personal Savings Allowance tier is decided using the UK thresholds too. So a Scottish saver and an English saver with the same income pay the same tax on the same interest. The Scotland toggle above changes your total bill (because your salary is taxed differently), but not the tax on the interest itself.
How the tax is collected
Banks and building societies report the interest they pay you to HMRC after the tax year ends. Tax isn't deducted at source. If you owe something, HMRC usually collects it by adjusting your tax code the following year, or sends a Simple Assessment letter to pay directly. Higher earners already in Self Assessment declare it on their return. The practical takeaway: the bill can arrive a year late, so it's worth knowing the number in advance — and worth remembering that moving cash into an ISA keeps the interest out of this system entirely.
Frequently asked questions
Do you pay tax on savings interest in the UK?
Sometimes. Interest from ordinary savings accounts is taxable, but most people pay nothing because of three allowances: any unused personal allowance, the starting rate for savings (up to £5,000 at 0%), and the Personal Savings Allowance (£1,000 basic-rate, £500 higher-rate, £0 additional-rate). You only pay tax on interest above whichever apply to you. ISA interest is always tax-free.
What is the Personal Savings Allowance in 2026/27?
It lets you earn some savings interest at 0% tax: £1,000 if you're a basic-rate taxpayer, £500 if higher-rate, and £0 if additional-rate. It hasn't risen since it was introduced in 2016, so as interest rates and incomes rise, more savers are dragged past it.
How much savings interest can I have before paying tax?
It depends on your other income. If interest is your only income, you could receive up to £18,570 tax-free in 2026/27 (£12,570 personal allowance + £5,000 starting rate + £1,000 PSA). The more non-savings income you have, the smaller these bands become — the starting rate is reduced pound-for-pound by income above the personal allowance.
What is the starting rate for savings?
An extra 0% band of up to £5,000 for savings interest, aimed at people with low non-savings income. It's reduced by £1 for every £1 of non-savings income (earnings and pensions) above your personal allowance, so it disappears once your non-savings income reaches about £17,570.
Do Scottish taxpayers pay the same tax on savings interest?
Yes. Savings interest is taxed at UK rates (20/40/45%) and against UK bands across the whole UK, including Scotland. Scottish income tax rates apply only to non-savings income such as earnings and pensions — not to savings interest or dividends.
How is tax on savings interest collected?
Banks report the interest they pay you to HMRC. If you owe tax, HMRC usually collects it by adjusting your tax code the following year, or through a Simple Assessment letter. Higher earners may declare it on Self Assessment. Tax isn't deducted at source by the bank.
Track your savings — and your tax exposure — in WealthR
This calculator answers one question for one year. WealthR's free app tracks your actual savings, ISAs, pensions and investments over time, and flags when your interest is drifting past your allowances — so the tax bill never ambushes you. Built in the UK, free to start, no card needed.