Find out if your savings interest exceeds the Personal Savings Allowance and calculate any tax due.
Tax Due on Interest
£250
Total Interest
£2,250
PSA
£1,000
Taxable Interest
£1,250
After-Tax Interest
£2,000
Your interest of £2,250 exceeds your £1,000 PSA by £1,250, taxed at 20%.
Since April 2016, most UK savers have benefited from the Personal Savings Allowance (PSA). This government initiative allows you to earn a certain amount of interest on your savings each year without paying any tax. It was designed to make saving simpler for most people.
The amount of your PSA depends on your income tax band. Basic rate (20%) taxpayers can earn up to £1,000 in interest tax-free. For higher rate (40%) taxpayers, the allowance is £500. Additional rate (45%) taxpayers do not receive a PSA. Interest from ISAs is always tax-free and does not use up your PSA.
Warning: Rising Rates Are Catching Savers Out
With savings rates increasing significantly, many people are earning more interest and exceeding their PSA for the first time. For example, a basic rate taxpayer with £25,000 in an account paying 4.5% interest would earn £1,125, pushing them over the allowance. It is more important than ever to track your interest with a tool like this one from Calculator Site.
The key to managing your savings tax is knowing your allowance and how close you are to it. Here are the crucial numbers for the current tax year.
£1,000
Basic Rate PSA
£500
Higher Rate PSA
£0
Additional Rate PSA
To see how your overall earnings affect your tax band, use our Take-Home Pay Calculator. For long-term planning, our Compound Interest Calculator can show how your savings might grow.
How to use this Calculator Site tool
Simply enter your total savings held outside of ISAs, the annual interest rate, and select your income tax band. The calculator will instantly show you the total interest earned and, crucially, whether any tax is due. It is a quick way to check if you need to budget for a tax payment on your interest.
Building a savings habit is one of the most effective ways to improve your financial wellbeing. You may also find our Compound Interest Savings Calculator useful for related calculations.
For a broader view of your finances, try the Compound Interest Calculator or the Take-Home Pay Calculator. All of our calculators are free to use and updated for the 2026/27 tax year where applicable. For official Personal Savings Allowance details, visit GOV.UK savings tax guide.
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