1. What is the UK Savings Tax Calculator?

The UK Savings Tax Calculator estimates the tax payable on savings interest based on your tax band and personal savings allowance (PSA). It helps you understand how much of your savings interest may be subject to taxation.

2. How Does the Calculator Work?

The calculator uses the UK savings tax formula:

Where:

• \( Interest \) — Total savings interest earned (GBP)
• \( PSA \) — Personal Savings Allowance (GBP)
• \( TaxRate \) — Marginal tax rate (decimal)

Explanation: The formula calculates tax only on the portion of savings interest that exceeds your personal savings allowance, using your marginal tax rate.

3. Understanding Personal Savings Allowance

Details: The Personal Savings Allowance (PSA) is the amount of savings interest you can earn each year without paying tax:

• Basic rate taxpayers: £1,000
• Higher rate taxpayers: £500
• Additional rate taxpayers: £0

4. Using the Calculator

Tips: Enter your total savings interest in GBP and select your appropriate tax band. The calculator will determine your tax liability based on current UK tax rules.

5. Frequently Asked Questions (FAQ)

Q1: Who qualifies for the Personal Savings Allowance?
A: Most UK taxpayers qualify for a PSA based on their income tax band. The allowance is automatically applied.

Q2: Is PSA in addition to the personal allowance?
A: Yes, the PSA is separate from your personal income tax allowance and applies specifically to savings interest.

Q3: What types of savings are covered by PSA?
A: PSA applies to interest from bank accounts, building societies, credit unions, and certain other savings products.

Q4: Do I need to declare savings interest below my PSA?
A: Typically no, if your total savings interest is below your PSA, you don't need to declare it or pay tax on it.

Q5: How often should I calculate my savings tax?
A: You should calculate it annually as part of your tax return preparation, or whenever your savings interest or tax band changes significantly.