Personal Savings Allowance Calculator United Kingdom

How the personal savings allowance works

The Personal Savings Allowance lets most people receive some bank and building society interest without paying tax on it. How much depends on which Income Tax band you fall into once all your income is counted, so two people receiving the same interest can face very different bills.

Enter the interest you expect and your other income, and the calculator shows the allowance you qualify for, how much of the interest stays tax-free, how much is taxed and at what rate, and what you keep.

The three allowance bands

A basic rate taxpayer gets £1,000, a higher rate taxpayer £500 and an additional rate taxpayer nothing, so all their interest is taxable.

The detail most often missed is that the interest itself counts when your band is decided. Someone whose salary is just under the higher rate threshold can be pushed over it by a good year of interest, halving their allowance. The calculator adds the interest to your income before choosing the band, so this is built into the result.

Dividends, rental profit, pension income and taxable benefits also count towards the band. Interest earned in an ISA does not, which is the main reason ISAs remain useful even when the allowance looks generous.

The 0% starting rate for savings

Below the allowance there is a less well-known relief: up to £5,000 of interest taxed at 0%. It shrinks by £1 for every £1 of non-savings taxable income above the personal allowance, so it disappears once ordinary earnings are £5,000 or more above the tax-free threshold, about £17,570.

Where it survives, it is worth a lot. A retired person with a modest State Pension, someone on a career break or someone living on savings between jobs can receive several thousand pounds of interest with no tax, because the starting rate applies before the allowance.

The calculator applies the reliefs in order: any unused personal allowance covers interest first, then the starting rate, then the Personal Savings Allowance, and only the rest is taxed.

Where the taxed interest actually sits

Interest is taxed after non-savings income, at the top of your income. Interest covered by the allowance carries no tax but still uses band space, so it pushes the taxable remainder further up the bands. The calculator models this, so someone straddling a band boundary sees the split rate rather than one blended figure.

For example, with £35,000 of other income and £1,200 of interest, a basic rate taxpayer gets the £1,000 allowance; the other £200 is taxed at 20%, £40.

The balance you can hold before tax

The results also show how much you could hold at your account rate before any interest becomes taxable: your total tax-free capacity divided by the rate. At 4.5%, a basic rate taxpayer with no starting rate available could hold about £22,200 before paying tax.

As rates rise, the same allowance covers a smaller balance, which is why periods of higher interest rates bring many ordinary savers into paying tax on interest for the first time. Treat the figure as a guide: rates change, and it assumes the balance is held for a full year at that rate.

How the tax gets paid

Banks and building societies pay interest without deducting tax and report it to HMRC, which usually collects any tax by adjusting your PAYE tax code in a later year. That is why a tax code can change for no obvious reason. If you file a Self Assessment return, declare the interest there. A large or unexpected amount of interest is worth checking rather than waiting for a code change.

Practical ways to reduce the bill

Moving savings into a cash ISA takes the interest out of the calculation. Holding savings in the name of a lower-earning spouse or civil partner can give a bigger allowance and possibly the starting rate. A gross pension contribution reduces taxable income and can move you from the £500 allowance back to £1,000.

Take care with fixed-rate bonds. Where interest is only paid at maturity, it is usually taxed in the year it is paid, so a multi-year bond can put several years of interest into one tax year and push you into a lower allowance band for that year. Spreading a large sum across bonds that mature in different tax years spreads the interest.

Premium Bond prizes are not interest and are tax-free, so they sit outside the calculation. Gilt coupons are taxable savings income, but gains on gilts are free of Capital Gains Tax. When choosing between a taxable account and an ISA, compare the after-tax return, because a slightly lower ISA rate can still win.

Reading the result

The figures are an estimate based on what you enter and current published allowances and rates. They do not account for dividends, capital gains, Gift Aid, tax code adjustments from earlier years or other personal circumstances, and they are not tax advice. Before moving a large balance or when a fixed-rate product matures, confirm the position with HMRC or a qualified adviser.

About This Tool: Personal Savings Allowance

Personal savings allowance: use this tool to get an instant, accurate estimate. The figures follow official GOV.UK guidance and every rate and threshold is kept up to date for 2026. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.