Personal Savings Allowance Calculator (2026/27)

How much of your savings interest can you keep tax-free?

With interest rates higher than they've been for years, savers are earning real money on their cash again - and, for the first time in a long while, some are paying tax on it.

The Personal Savings Allowance (PSA) lets most people earn a chunk of interest tax-free, but the rules interact with your income in ways that aren't obvious, and a second, lesser-known allowance - the starting rate for savings - can shelter even more if your other income is low. This calculator brings both together so you can see exactly how much of your interest is tax-free and what, if anything, you'll owe on the rest.

The Personal Savings Allowance explained

The PSA is a band of savings interest you can earn without paying tax, and its size depends on your income tax band:

• Basic-rate taxpayers get a £1,000 Personal Savings Allowance
• Higher-rate taxpayers get £500
• Additional-rate taxpayers get nothing - £0

So a basic-rate taxpayer with £900 of interest pays no tax on it at all. A higher-rate taxpayer with the same £900 pays tax on £400 of it, because their allowance is only £500. The cruel quirk is the cliff-edge: tipping from basic into higher rate halves your PSA, and tipping into additional rate removes it entirely. The government's overview of tax-free interest on savings sets out the basics.

The starting rate for savings - the allowance people forget

On top of the PSA, there's a separate £5,000 "starting rate for savings" band taxed at 0%. It's aimed at people with low non-savings income, and it tapers away as your other income rises. Specifically, the £5,000 is reduced by £1 for every £1 of non-savings taxable income (your income above the Personal Allowance).

So if your salary or pension is £12,570 or less, you keep the full £5,000; if it's £17,570 or more, the starting rate is wiped out entirely. Between those points you get part of it.

This is brilliant news for, say, a semi-retired person with a small pension and a large savings pot, or someone living off savings between jobs. They can potentially earn £5,000 of interest under the starting rate, plus £1,000 under the PSA, for £6,000 of tax-free interest - even more once you add the Personal Allowance itself. The calculator works all of this out automatically from the two figures you enter.

How interest above the allowances is taxed

Anything above your combined tax-free amount is taxed at your normal income tax rate, because savings interest sits on top of your other income. For most people that's 20%, but if your income pushes the interest into the higher band it's 40%, and 45% above that.

Our calculator estimates the tax using your marginal rate; where a big slug of interest straddles two bands the exact figure can differ slightly, but for the vast majority of savers the estimate is spot-on. For a fuller view of how all your income is taxed, pair it with our Income Tax Calculator.

ISAs: the allowance that never runs out

The simplest way to avoid savings tax altogether is to use an ISA. Interest earned inside a cash ISA is always tax-free and never touches your Personal Savings Allowance, no matter how much you earn. With the annual ISA allowance at a generous level, higher earners in particular should think about sheltering savings there before holding large sums in ordinary accounts.

Our ISA Calculator projects how a tax-free pot can grow, and the Savings Calculator and Compound Interest Calculator show the power of regular saving over time.

A worked example

Take Sam, a basic-rate taxpayer with a £40,000 salary and £1,400 of savings interest. His non-savings income is well above £17,570, so the starting rate for savings is gone. He gets the £1,000 PSA, leaving £400 of interest taxable at 20% - a tax bill of £80. Now take Jess, who's between jobs with £8,000 of other income and £4,000 of interest.

Her other income is below the Personal Allowance, so she keeps the full £5,000 starting rate plus the £1,000 PSA - her entire £4,000 of interest is tax-free. Same interest, completely different outcomes, all driven by their other income. That's exactly the interaction this tool makes visible.

How tax on savings interest is collected

Banks no longer deduct tax from your interest - it's paid gross. If you owe tax on interest above your allowances, HMRC usually collects it by adjusting your tax code or through Self Assessment if you already file a return. Because it's not taken automatically, it's easy to forget you owe it, so it's worth checking each year - especially now rates are higher and more people are tipping over their allowance.

If you think your code is wrong, our Tax Code Checker can help, and HMRC's check your income tax service shows what they think you owe.

The bottom line

Between the Personal Savings Allowance, the starting rate for savings and ISAs, most people can earn a healthy amount of interest tax-free - but the rules reward a bit of planning. Higher earners should lean on ISAs; lower earners should make the most of the starting rate; and everyone should know where their allowance runs out.

Enter your income and interest above to see your tax-free amount and any tax due, then use our savings tools to make your money work harder still.

How the allowances stack - in order

It helps to picture your income in layers, because that's how HMRC taxes it. First comes your non-savings income (salary, pension, self-employment), which uses up your Personal Allowance and then runs through the tax bands. Savings interest sits on top of that.

Three things then shelter the interest, in this order: any unused Personal Allowance, then the starting rate for savings (up to £5,000, tapered by your non-savings income above the Personal Allowance), then the Personal Savings Allowance (£1,000, £500 or £0 by band). Only interest above all three is taxed, and it's taxed at the rate of the band it falls into.

Seeing it as a stack explains why two people with identical interest can pay wildly different tax - it all depends on how much room is left after their other income.

Strategies to cut tax on savings

There's plenty you can do. Use ISAs first - interest inside an ISA is always tax-free and never touches your allowances, so higher earners especially should fill an ISA before holding large cash balances elsewhere; our ISA Calculator shows the long-term benefit. Share savings between partners - if one of you is a basic-rate taxpayer or a non-earner, holding more of the joint savings in their name uses their larger allowance and lower rate.

Mind the band cliff-edges - earning just enough to tip from basic to higher rate halves your PSA, so pension contributions that keep you in the basic band can protect it. Consider Premium Bonds - prizes are tax-free, which appeals to those who've used up their allowances; our Premium Bonds Calculator estimates a typical return.

When you'll need to tell HMRC

Because banks pay interest gross, the responsibility to account for any tax sits with you. If you're employed, HMRC usually adjusts your tax code to collect small amounts automatically, based on information banks report to them. If you complete Self Assessment, you declare interest on your return.

Larger or unexpected interest can leave you with an underpayment collected through a later tax code, so it's worth keeping a rough tally yourself - particularly now rates are higher and ordinary savers are crossing their allowance for the first time in years. Cross-check what HMRC thinks you owe using their check your Income Tax service, and if your code looks wrong, our Tax Code Checker can help you understand it.

The bigger savings picture

Tax is only one factor in how your savings grow. The interest rate, how often it compounds, and how regularly you add to the pot usually matter more over time than the tax treatment. Use our Compound Interest Calculator and Savings Calculator to project growth, and the Savings Goal Calculator to work out what you need to put aside to hit a target.

Combine sensible saving with smart use of your allowances and ISAs, and you'll keep far more of what your money earns.

The bottom line on savings tax

For years, near-zero interest rates meant hardly anyone paid tax on savings, and the Personal Savings Allowance felt academic. That's changed: with rates higher, ordinary savers with a decent cash balance are crossing their allowance and facing a bill they didn't expect. The good news is that the system is generous if you understand it.

Between your Personal Allowance, the £5,000 starting rate for savings, and the £1,000 or £500 Personal Savings Allowance, most people can shelter a meaningful amount of interest - and anyone can shelter unlimited interest inside an ISA. The trap is simply not knowing where your allowance ends.

A basic-rate taxpayer with a large pot, or anyone who tips into the higher band, should pay particular attention, because that's where unexpected tax bites. Run your numbers through the calculator above, check whether an ISA would serve you better, and split savings with a lower-earning partner where it makes sense. A little planning turns savings tax from an annual surprise into something you control.

And remember the figures here are estimates to guide your planning - for your precise position, especially where interest straddles two tax bands, your Self Assessment return or HMRC's records are the final word, and an accountant can help with anything complex.

Related tools

• Savings interest tax calculator, work out tax on interest above your allowance.

Who should use this calculator

The Personal Savings Allowance lets most people receive savings interest tax-free: £1,000 for basic-rate taxpayers, £500 for higher-rate, and nothing for additional-rate. This shows how much of your interest is covered and how much is taxable.

The band boundary produces a genuinely odd effect: crossing into higher rate halves your allowance, so a small pay rise can cost more in tax on savings than the rise itself is worth. The separate starting rate for savings — up to £5,000 of interest tax-free for those with low earned income — is also widely unknown and valuable for pensioners.

What this calculator assumes

• The allowance is £1,000 basic rate, £500 higher rate, nil additional rate.
• Reliefs apply in order: unused Personal Allowance, then the starting rate for savings, then the PSA.
• The starting rate reduces as non-savings income rises above the Personal Allowance.
• Interest is taxed in the year it is made available.

Limitations — what it does not cover

• ISA interest, tax-free and outside all of this.
• Fixed-term bonds paying at maturity, which can bunch several years’ interest into one year and exceed the allowance.
• Joint accounts, normally split equally.
• How the tax is collected — usually a tax code adjustment rather than a bill.
• Dividends, which have a separate £500 allowance and their own rates.
• Children’s accounts and the parental settlement rule above £100 of interest.