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2026/27 Tax Year

Savings Interest Tax Calculator

Cash savings feel simple until interest starts leaking into tax. This page estimates what survives after the Personal Allowance, the starting rate for savings, and the Personal Savings Allowance have all had their say.

Scope note: this calculator uses the 2026/27 UK savings-interest rules and England, Wales, and Northern Ireland band structure for estimating how your savings interest is taxed.
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Your taxable income

Salary, pension income, rental income, or other taxable income before savings interest.
Optional, but useful because dividend income can reduce your Personal Savings Allowance.
Estimated tax due on your taxable savings interest
£0 After-tax savings interest kept: £0
After-tax savings interest kept£0
Personal Savings Allowance used£0
Starting rate for savings used£0
Personal Allowance used against savings£0
PSA tierBasic-rate PSA: £1,000
Interest taxed at 20%£0
Interest taxed at 40% / 45%£0 / £0

What this means

Interest is taxed after your non-savings income has already used up part of the band structure. That is why a modest amount of savings interest can still be fully sheltered for one person and partly taxable for another.

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Worked examples — see the maths on real numbers

How the Personal Savings Allowance (PSA) and Starting Rate for Savings band combine for typical UK savers in 2026/27.

Jamie — basic-rate taxpayer with £40,000 in easy-access savings

Annual salary£28,000
Savings balance£40,000 at 4.5% AER
Interest earned£1,800
PSA (basic rate)£1,000

The maths:

  1. £1,000 covered by PSA — tax-free
  2. Remaining £800 taxed at 20% basic-rate
  3. Tax on savings: £800 × 20% = £160

Result: Jamie nets £1,640 from his savings interest. Moving £18,000 into a Cash ISA during 2026/27 (the overall ISA limit is £20,000) would leave £22,000 earning £990 a year, inside his £1,000 allowance at today's rate, saving the £160. From 6 April 2027 the yearly Cash ISA limit falls to £12,000 for savers under 65, so a move of this size would need to be made this tax year or spread over two.

Priya — higher-rate taxpayer with NS&I + bank savings

Salary£72,000
NS&I Premium Bonds prize earnings£600 (tax-free)
Bank savings interest£2,400
Total taxable interest£2,400
PSA (higher rate)£500

The maths:

  1. £500 covered by PSA — tax-free
  2. Remaining £1,900 taxed at 40% higher-rate
  3. Tax on savings: £1,900 × 40% = £760
  4. Premium Bonds prizes are completely tax-free regardless of amount

Result: Priya nets £1,640 of her £2,400 bank interest, plus the £600 from Premium Bonds tax-free. For higher-rate taxpayers, every £1 of bank interest above £500 costs 40p — Premium Bonds and Cash ISAs become genuinely attractive.

Figures use 2026/27 UK tax-year rates and thresholds. Always verify against your specific payslip or tax statement before acting.

How the calculation works, and sources

The calculator follows the order HMRC uses for 2026/27 in England, Wales and Northern Ireland. Your Personal Allowance (£12,570, reduced by £1 for every £2 of adjusted net income over £100,000) is set against non-savings income first. Savings interest then sits on top. Up to £5,000 of it can fall in the 0% starting rate for savings, reduced by £1 for every £1 of non-savings income above the Personal Allowance, so it is lost completely once that income reaches £17,570. Next comes the Personal Savings Allowance: £1,000 if none of your income is taxed above the basic rate, £500 if some is taxed at the higher rate, and nothing for additional-rate taxpayers. Interest covered by the starting rate or the allowance is taxed at 0% but still uses up your basic-rate band, so interest above it is taxed at 20%, 40% or 45% depending on where it lands.

Changes ahead: Budget 2025 confirmed that the savings rates rise by 2 percentage points to 22%, 42% and 47% from 6 April 2027, and kept the starting rate for savings at £5,000 up to 2030/31. Separately, from 6 April 2027 the yearly Cash ISA limit falls to £12,000 for savers under 65, inside an unchanged £20,000 overall ISA limit.

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What the zero-rate layers do

Savings interest can be covered in several stages. Any spare Personal Allowance hits first, then the starting rate for savings if your other income is low enough, then the Personal Savings Allowance based on your overall tax band.

Sources and assumptions

GOV.UK tax-free interest on savings guidance HMRC income tax rates and allowances

This page estimates tax on taxable savings interest for the 2026/27 tax year. It is not a full self-assessment calculation and does not attempt to cover every special relief.