Savings Interest Calculator
Calculate exactly how much interest your lump sum will earn. Choose compounding frequency, see your tax position, and compare account types.
Your Savings
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Final balance
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Tax on interest
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Net interest after tax
Year-by-Year Breakdown
| Year | Opening Balance | Interest Earned | Closing Balance |
|---|
Savings Account Types: Rate & Access Comparison
| Account Type | Typical AER | Access | Tax |
|---|---|---|---|
| Easy-access savings | 3.5–4.8% | Instant withdrawal | Interest taxable (PSA applies) |
| Cash ISA (easy-access) | 3.3–4.5% | Instant withdrawal | Always tax-free |
| 1-year fixed bond | 4.2–4.9% | Locked for 1 year | Interest taxable (PSA applies) |
| 2-year fixed bond | 4.0–4.7% | Locked for 2 years | Interest taxable (PSA applies) |
| Cash ISA (fixed) | 3.9–4.6% | Locked for term | Always tax-free |
| Premium Bonds (NS&I) | ~4.4% tax-free | 1 month notice | Always tax-free (prize draw) |
| Regular saver | 5–7% | Monthly deposits only | Interest taxable (PSA applies) |
Rates approximate as of mid-2026. Check current rates at your bank or comparison sites.
Personal Savings Allowance (2026/27)
| Taxpayer Band | Income Threshold | PSA |
|---|---|---|
| Basic rate (20%) | Up to £50,270 | £1,000 tax-free interest |
| Higher rate (40%) | £50,271–£125,140 | £500 tax-free interest |
| Additional rate (45%) | Over £125,140 | No PSA (all interest taxable) |
| Cash ISA holder | Any income | All interest tax-free, no limit |
AER vs Gross Rate
The AER (Annual Equivalent Rate) accounts for compounding — it's the number you should use to compare accounts. The gross rate is the stated rate before compounding is applied. For monthly-compounding accounts, the AER is slightly higher than the gross rate. Always compare using AER.
Frequently Asked Questions
Basic-rate taxpayers can earn £1,000 in savings interest tax-free (Personal Savings Allowance). Higher-rate taxpayers get £500. Additional-rate taxpayers get £0. Cash ISA interest is always tax-free and doesn't use your PSA. If your savings generate more than your PSA, you pay income tax on the excess at your marginal rate.
If your savings interest will stay within your PSA, standard accounts often pay higher rates. If you're likely to exceed your PSA — for instance, a basic-rate taxpayer with over ~£22,000 in savings at 4.5% — an ISA becomes valuable. Higher-rate taxpayers should consider an ISA sooner (PSA exhausted at ~£11,000 at 4.5%). The ISA allowance is £20,000 per tax year.
The Financial Services Compensation Scheme (FSCS) protects up to £85,000 per person per authorised institution. Joint accounts are protected up to £170,000. If you have more than £85,000, spread it across multiple FSCS-protected banks. NS&I accounts (Premium Bonds, Income Bonds) are 100% government-backed with no limit.
The Savings Calculator models ongoing regular monthly deposits alongside a starting balance — ideal for building up savings over time. This calculator focuses on a single lump sum deposit at a fixed rate, ideal for comparing fixed-rate bonds, ISAs, or any account where you deposit once and leave it. Use both together to get the full picture.
Most variable-rate savings accounts and easy-access accounts track the Bank of England base rate (currently 4.25% in 2026). When the base rate falls, easy-access rates typically follow. Fixed-rate bonds lock in a rate regardless of base rate changes. In a falling rate environment, locking in a 1-2 year fixed bond can be advantageous.