Estimate savings growth, tax due and interest after tax for the 2026/27 tax year.
Estimate for the 2026/27 tax year. Personal Savings Allowance: £1,000 (basic rate), £500 (higher rate), £0 (additional rate) — it applies to your total savings interest across all accounts, not just this one. ISA interest is tax-free. Banks no longer deduct tax at source.
The balance compounds monthly, with monthly deposits added after that month’s interest is calculated.
The Personal Savings Allowance is applied separately to the interest earned in each year, unless the savings are held in an ISA.
Yes. The calculator applies the relevant allowance to interest in each year of the savings period.
No. Your allowance covers total savings interest across all accounts.
No. Interest earned inside an ISA is tax-free in this estimate.
Since banks stopped deducting tax at source in 2016, savings interest arrives gross and the tax — if any — is collected later, usually through your tax code. Most people pay nothing, thanks to the Personal Savings Allowance (PSA): £1,000 of interest tax-free for basic-rate taxpayers, £500 for higher-rate, and nothing for additional-rate taxpayers. The calculator above compounds your savings monthly and then applies the PSA year by year, because the allowance renews annually — taxing a five-year total in one lump would badly overstate the bill.
Put £20,000 into a 4.5% account for five years. It grows to about £25,036, earning £5,036 of interest. As a basic-rate taxpayer you owe just £31 in tax — the £1,000 yearly allowance swallows nearly all of it. As a higher-rate taxpayer the same account costs you £1,014 in tax, because your allowance is half the size and the rate is double. Inside an ISA, the tax is £0 either way. Same money, same bank, same rate — three different outcomes.
Banks report interest to HMRC automatically. If you owe tax, HMRC usually adjusts your PAYE tax code the following year, so it comes out of your salary. Self Assessment filers declare it on the return instead.
No. Premium Bond prizes are tax-free by their own rules, and dividends have a separate (much smaller) dividend allowance. The PSA covers interest: savings accounts, bonds, credit-union payouts and some peer-to-peer lending.
Deposits are protected by the FSCS up to £85,000 per person per banking licence — note licence, not brand: some banks share one. Above that, split across institutions.