Will you pay tax on your savings interest this year?
You need: Your income before tax, and roughly how much interest you expect. Nothing you type leaves this page.
Your figures
Roughly: your balance times the rate. £20,000 at 4% is £800 a year. Interest inside an ISA is always tax-free and does not count here. Each person has their own allowances, so a couple checks separately.
Tax on your interest
- You are a basic rate taxpayer20%
- Personal Savings Allowance£1,000
- Interest you can earn tax-free£1,000
- Balance you can hold at 4% before tax£25,000
- Of your £800, taxable£0
You can earn £1,000 of interest a year before any tax. You are inside it, so an ISA saves you no tax this year, though rates matter more than the wrapper. See the cash ISAs we have verified.
Scotland: “You'll pay the same tax as the rest of the UK on dividends and savings interest.” Your earned income sits in Scottish bands, but the tax on interest, and the Personal Savings Allowance, follow the UK bands used here (gov.uk). From 6 April 2027, tax on savings interest rises to 22%, 42% and 47%; the allowances stay (gov.uk). Not applied to this year's answer.
Tell me when a verified cash ISA beats my rate
If interest is being taxed, a cash ISA at a similar rate keeps all of it. One email when a cash ISA we have verified passes the rate you typed.
The working behind the figure, with the maths shown rather than a shortcut.
How HMRC works it out
Savings interest is taxed on top of your other income, in a set order. First, any Personal Allowance your wages or pension did not use covers interest. Then the starting rate for savings gives up to £5,000 of interest at 0%, but it shrinks by a pound for every pound of other income above the Personal Allowance, so it is gone once other income reaches £17,570. Then the Personal Savings Allowance: £1,000 for a basic rate taxpayer, £500 for higher rate, nothing at additional rate. What is left is taxed at your rate.
The band is set by your total income including the interest, which is why interest can tip you into the higher band and halve your allowance. The checker follows that, and where the taxable part straddles a threshold it taxes each slice at its own rate.
Three examples
£30,000 of wages and £1,500 of interest: the first £1,000 is covered by the Personal Savings Allowance and £500 is taxed at 20%, so £100. £14,500 of wages and £2,500 of interest: the starting rate for savings still has £3,070 left, which covers all of it, so nothing. No other income and £20,000 of interest: £12,570 of unused allowance, £5,000 of starting rate and £1,000 of Personal Savings Allowance leave £1,430 taxed at 20%, so £286.
How is the tax collected?
Banks pay interest without deducting tax. HMRC usually collects any tax due through your tax code the following year, using figures the banks report. If you fill in a Self Assessment return, you declare it there.
I live in Scotland. Does this apply to me?
Yes for the interest. Scotland sets its own bands on earned income, but savings interest is taxed at the UK rates and the Personal Savings Allowance follows the UK bands, as gov.uk states.
Does ISA interest count?
No. Interest inside an ISA is never taxed and never counts towards the allowances, which is the whole point of the wrapper.
What changes in April 2027?
The rates on savings interest rise by two percentage points, to 22%, 42% and 47%. The allowances stay the same. This page shows the current year and will change on the day.
What happens if I earn more than £1,000 in interest?
If you are a basic rate taxpayer, the interest above £1,000 is taxed at 20%, after any starting rate for savings you qualify for on a low income. HMRC usually collects it by changing your tax code; if you fill in a Self Assessment return, you declare it there instead.
Do banks tell HMRC about my savings interest?
Yes. Banks and building societies report the interest they paid you to HMRC after the end of the tax year, which is how HMRC works out any tax due without you filing anything. Interest inside an ISA is not reported because none of it is taxable.