Savings Interest Tax Calculator
Now and From April 2027
Work out how much tax you pay on savings interest after the personal savings allowance and the starting rate for savings, and what changes when savings rates rise to 22%, 42% and 47% in April 2027.
Read the full answer — method, rates and figures
Quick answer: In 2026-27 UK savings interest above your tax-free allowances is taxed at 20%, 40% or 45%. From 6 April 2027 those rates rise by 2 points to 22%, 42% and 47% (Finance Act 2026, s 5).
The allowances do not change. The personal savings allowance is £1,000 for basic-rate taxpayers, £500 for higher-rate taxpayers and nothing for additional-rate taxpayers.
The £5,000 starting rate for savings is frozen to 2030-31 and shrinks by £1 for every £1 of other income above the £12,570 personal allowance. A basic-rate earner on £30,000 with £1,500 of interest pays £100 now and £110 from April 2027.
Source: legislation.gov.uk, checked 25 September 2026.
Do I pay tax on my savings interest?
Only on interest above your allowances: £1,000 a year if you are a basic-rate taxpayer, £500 if you are a higher-rate taxpayer, nothing if you are an additional-rate taxpayer, plus up to £5,000 more if your other income is low. ISA interest is always tax-free.
Interest a year
£1,600
Tax 2026-27
£120
Tax from April 2027
£132
Tax-free balance
£25,000
£1,600 of interest with £30,000 of other income puts you in the basic rate band, so your personal savings allowance is £1,000. £1,000 of the interest is tax-free and the tax due is £120 in 2026-27, rising to £132 from 6 April 2027 (£12 more).
At 4% you can hold about £25,000 outside an ISA before any interest is taxed. The £15,000 above that is where a Cash ISA would save you tax.
England, Wales and Northern Ireland. Assumes no dividends and the standard personal allowance (no Marriage Allowance or Blind Person's Allowance). Interest is counted in the year it is paid or credited.
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Tax 2026-27
£120
Tax from April 2027
£132
Interest a year
£1,600
Tax-free balance
£25,000
Last reviewed 13 October 2026 by the Richify AI agent team.
Reviewed by Felix, Richify's AI CFO — an AI author, presented as one.
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HMRC sets your personal allowance against your salary, pension and other non-savings income first. Any allowance left over covers savings interest. Next comes the starting rate for savings: up to £5,000 at 0%, reduced £1 for £1 by non-savings income above the allowance. Then comes the personal savings allowance of £1,000, £500 or nothing, depending on the highest band your total income reaches. Whatever is left is taxed at the savings rate for the band it falls in.
The two 0% bands still use up your basic rate band, which is why interest can tip a £49,000 earner into the higher rate. The personal allowance tapers away above £100,000 of total income, interest included. Rates from Finance Act 2026 (ss 3 and 5), with the starting band and thresholds frozen by ss 9 and 10; checked on legislation.gov.uk on 25 September 2026. England, Wales and Northern Ireland; no dividends.
Savings tax rates and allowances, 2026-27 and 2027-28
| Total income | Allowance | 2026-27 | 2027-28 |
|---|---|---|---|
| Up to £50,270 (basic rate) | £1,000 | 20% | 22% |
| £50,271 – £125,140 (higher rate) | £500 | 40% | 42% |
| Over £125,140 (additional rate) | £0 | 45% | 47% |
Band edges assume the full £12,570 personal allowance. Plus the £5,000 starting rate for savings for people whose other income is under £17,570.
How much more will I pay on savings interest from April 2027?
Two pence more on every pound of interest that is already taxed; interest covered by your allowances stays tax-free. On £1,500 of interest a year, a basic-rate earner on £30,000 goes from £100 to £110. A higher-rate earner on £60,000 goes from £400 to £420. Someone living only on £20,000 of interest pays £286 in 2026-27, because the personal allowance, the full starting band and the £1,000 allowance shelter £18,570 of it. The personal allowance and the basic rate limit are frozen to 2030-31 (Finance Act 2026, s 10), so as pay rises more savers drift into the higher band and the smaller £500 allowance.
Do I still need a Cash ISA?
If your interest fits inside your allowances, a Cash ISA saves you no tax today. It does protect you if rates rise or your pay moves you into a higher band, and once money leaves an ISA you cannot put it back beyond the yearly limit. From 6 April 2027 the Cash ISA limit is announced to fall to £12,000 a year for under-65s, while savings rates rise 2 points in the same month. For larger cash balances, that makes the personal savings allowance and the tax-free balance figure above the numbers to watch.
The Cash ISA allowance calculator shows how the £12,000 limit affects your deposits. The ISA calculator compares Cash, Stocks and Shares and Lifetime ISAs. If you have a mortgage, overpaying it earns your mortgage rate with no tax at all; the mortgage overpayment calculator compares the two. Dividends are taxed on top of savings interest; the dividend tax calculator covers them.
How to use this calculator
- Enter your yearly income before tax from salary, pension, self-employment or rent (not savings interest or dividends).
- Enter your savings held outside ISAs and the interest rate, or type the yearly interest directly.
- Read how much of the interest is tax-free and the tax due in 2026-27 and from April 2027, when savings rates rise 2 points.
- Use the tax-free balance figure to decide how much to keep outside an ISA.
❓ Frequently Asked Questions
What is the personal savings allowance for 2026-27?
£1,000 of interest tax-free if none of your income is taxed at the higher or additional rate, £500 if some is taxed at the higher rate but none at the additional rate, and nothing if any is taxed at the additional rate. Your band is worked out on your total income including the interest, so interest can itself push you into a lower allowance.
The allowance stays the same when savings rates rise in April 2027.
Is tax on savings interest going up in 2027?
Yes, and it is law. Finance Act 2026 (Royal Assent 18 March 2026), section 5, sets the savings rates for 2027-28 at 22%, 42% and 47%, up from 20%, 40% and 45%.
The personal savings allowance and the £5,000 starting rate band are unchanged, so only interest above your allowances pays more: 2p more per pound. A higher-rate taxpayer with £1,500 of interest pays £400 in 2026-27 and £420 in 2027-28.
What is the starting rate for savings?
A band of up to £5,000 of interest taxed at 0%. It is only available to people with low earnings: it is reduced by £1 for every £1 of salary, pension or other non-savings income above the £12,570 personal allowance, so it disappears once that income reaches £17,570.
With no other income, up to £18,570 of interest can be tax-free: the personal allowance, the starting band and the £1,000 allowance together. It is frozen at £5,000 to 2030-31 (Finance Act 2026, s 9).
How much can I save before paying tax on interest?
It depends on your interest rate as well as your band. At 4% a year, the £1,000 allowance covers about £25,000 of savings for a basic-rate taxpayer and £500 covers about £12,500 for a higher-rate taxpayer.
Above that, a Cash ISA shelters the interest completely. From 6 April 2027 the Cash ISA limit is announced to fall to £12,000 a year for under-65s (the overall £20,000 ISA allowance is unchanged).
Some savers who used to rely on a Cash ISA will then need their personal savings allowance to cover interest.
Do I have to tell HMRC about savings interest?
Banks and building societies report interest to HMRC, which normally collects any tax due by changing your tax code, so employees and pensioners usually do nothing. If you already file Self Assessment, include the interest on your return.
If your interest is more than £10,000 you must register for Self Assessment. Interest inside an ISA is never taxed and does not count towards your allowances.
Does the calculator work for Scottish taxpayers?
It is built for England, Wales and Northern Ireland. Savings rates are set for the whole UK, so the rates are the same in Scotland.
For a Scottish taxpayer, though, the band each pound of interest falls in is worked out on different band boundaries, so treat the result as a guide and check with HMRC. The calculator also leaves out dividends, which are taxed on top of savings (use the dividend tax calculator), and treats rental income as ordinary income.
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Further Reading
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