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Tax calculator

Tax on Savings Interest Calculator

See how much tax is due on your savings interest for the 2026-27 tax year. Add your interest and your other income, and we'll apply your Personal Savings Allowance and starting rate, then show the tax and what you keep. Free, no signup.

Free, no signup2026/27 figuresVerify at gov.uk
Your figures
Total interest from banks, building societies and other accounts, outside an ISA
£
Salary, pension, self-employment and rent, before this interest
£
Your other income sets which allowances apply, so we work out your band and starting rate for you. Interest inside an ISA is tax-free and does not count here.
Scottish taxpayers: this calculator works for you as it stands. Savings interest is taxed at UK rates across the whole UK, and the Personal Savings Allowance is set by the UK thresholds too, so the Scottish bands do not change either figure.
Tax on your savings interest
£100
An effective 6.7% on your interest. You keep £1,400.
Basic: £500 at 20%
Tax-free interestPersonal allowance, starting rate and savings allowance£1,000
Tax due£100
Interest after tax£1,400
You are a basic rate taxpayer, so your Personal Savings Allowance is £1,000. Moving savings into a cash ISA shelters the interest from tax entirely.
2026-27 figures (unchanged from 2025-26): £1,000 / £500 / £0 savings allowance, £5,000 starting rate, taxed at 20% / 40% / 45%. Applies across the whole UK, Scotland included. General information, not tax advice.
Simon Chadwick
Simon Chadwick
Founder, Orbit Money
Method: gov.uk savings allowances and Income Tax ratesUpdated: 17 July 2026Sources: gov.uk/apply-tax-free-interest-on-savings

How tax on savings interest works

Savings interest is taxable income, but most people pay nothing because of three tax-free layers. Your personal allowance of £12,570 comes off your income first. The starting rate for savings can shelter up to £5,000 of interest at 0% if your other income is low. The Personal Savings Allowance then covers £1,000 of interest for a basic-rate taxpayer. Anything above those layers is taxed at your usual rate: 20%, 40% or 45%. Interest held inside an ISA is free of tax and sits outside all of this.

The Personal Savings Allowance for 2026-27

The Personal Savings Allowance depends on your Income Tax band. Basic-rate taxpayers get £1,000 of interest tax-free, higher-rate taxpayers get £500, and additional-rate taxpayers get nothing. Your band is set by your total income, including the interest itself, so a large amount of interest can push you into a higher band and shrink the allowance. These figures are unchanged from 2025-26.

The starting rate for savings

If your non-savings income is below £17,570, you can earn up to £5,000 of interest at a 0% starting rate. Every £1 of other income above your £12,570 personal allowance reduces this £5,000 band by £1, so it is gone once your other income reaches £17,570. This is why someone with a small pension or part-time earnings can often receive several thousand pounds of interest with no tax to pay.

Savings interest if you are a Scottish taxpayer

Scotland has six income tax bands rather than three, running from a 19% starter rate to a 48% top rate. None of them apply to savings interest. The Scottish Parliament's power covers non-savings, non-dividend income only, so interest is taxed at the UK rates of 20%, 40% and 45% wherever in the UK you live.

The Personal Savings Allowance follows the UK thresholds too, which catches a lot of calculators out. The legislation treats a Scottish taxpayer as having higher-rate income only if that income would be taxed at the UK higher rate, so the test is the £50,270 UK threshold rather than the £43,663 Scottish one. Someone in Scotland on £45,000 pays the 42% Scottish higher rate on their salary and still keeps the full £1,000 Personal Savings Allowance. The figures on this page apply to you unchanged.

How HMRC collects the tax

Banks and building societies report your interest to HMRC after the tax year ends. For most people HMRC then collects any tax by adjusting the tax code for the following year, so there is nothing to do. If you complete a Self Assessment return, you enter the interest there and pay through your bill.

How to pay less tax on savings interest

A cash ISA shelters interest from tax entirely and does not use up your Personal Savings Allowance. Premium Bonds prizes are also tax-free. Couples can spread savings so both use their allowances, and moving savings to a lower-earning partner can help. The right approach depends on your circumstances, so treat this as a guide, not tax advice.

Frequently asked questions

How much can I have in savings without paying tax?
There is no limit on the savings balance itself, only on the interest it earns. For 2026-27 a basic-rate taxpayer can earn £1,000 of interest tax-free under the Personal Savings Allowance. If you have little or no other income you can add the £12,570 personal allowance and up to £5,000 of starting rate for savings on top, so someone with no other income could earn up to £18,570 of interest before any tax is due.
What happens if I earn more than £1,000 interest on my savings?
The £1,000 Personal Savings Allowance covers basic-rate taxpayers. Interest above your allowance is taxed at your marginal rate: 20% for a basic-rate taxpayer, 40% for a higher-rate taxpayer and 45% at the additional rate. So a basic-rate taxpayer with £1,200 of interest pays 20% on the £200 over the allowance, which is £40. HMRC usually collects it by changing your tax code, or through Self Assessment if you file a return.
Do you pay 20% tax on savings interest?
Only on the part above your allowances. The first slice is tax-free through your personal allowance, the starting rate for savings and the Personal Savings Allowance. Interest above that is taxed at your usual Income Tax rate, which is 20% for a basic-rate taxpayer, 40% for higher rate and 45% for additional rate.
How much tax will I pay on £5,000 of savings interest?
It depends on your other income. With no other income, all £5,000 is likely tax-free through your personal allowance and starting rate. A basic-rate taxpayer with a normal salary would have £1,000 covered by the savings allowance and pay 20% on the remaining £4,000, which is £800. A higher-rate taxpayer would have £500 covered and pay 40% on £4,500, which is £1,800. Enter your figures above for your exact position.
Is tax on savings interest different in Scotland?
No. Income tax on savings interest is the same across the whole UK. The Scottish Parliament sets rates and bands for non-savings, non-dividend income only, so a Scottish taxpayer pays 20%, 40% or 45% on interest above their allowances, not the Scottish 19% to 48% rates. The Personal Savings Allowance is set by the UK thresholds as well: the law treats a Scottish taxpayer as a higher-rate taxpayer only if their income would be taxed at the UK higher rate, which starts at £50,270. So someone in Scotland earning £45,000 pays the 42% Scottish higher rate on their salary but still keeps the full £1,000 savings allowance. This calculator is therefore accurate for Scottish taxpayers as it stands.
Do banks tell HMRC about savings interest?
Yes. Banks and building societies report the interest they pay you to HMRC after the end of the tax year. HMRC then works out any tax due and usually collects it by adjusting your tax code for the following year, so most people do not need to do anything. If you complete a Self Assessment return, you report the interest there instead.
Do pensioners pay tax on savings interest?
Pensioners are taxed on savings interest under the same rules as everyone else. The state pension and other pension income count as your other income and use up your personal allowance first. If your total income is low, the £5,000 starting rate for savings can shelter a large amount of interest, so many pensioners with modest pensions pay no tax on their savings at all.

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Simon Chadwick
About the author
Simon Chadwick
Founder of Orbit Money

Simon is the founder of Orbit Money, a tool that helps people track subscriptions and recurring spend. He builds Orbit's free money calculators and writes about personal finance for UK and Australian readers.

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This tool is a guide, not tax advice.