Savings Account Tax Calculator UK

UK Savings Tax Formula:

\[ Tax = \max(0, Interest - PSA) \times Tax\_Rate \]

Tax Amount:

Personal Savings Allowance:

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What is the UK Savings Tax Calculator?

The UK Savings Tax Calculator estimates the tax payable on savings account interest using the Personal Savings Allowance (PSA) and your marginal tax rate. It helps UK taxpayers understand their potential tax liability on savings income.

2. How Does the Calculator Work?

The calculator uses the UK savings tax formula:

\[ Tax = \max(0, Interest - PSA) \times Tax\_Rate \]

Where:

\( Interest \) — Total savings interest earned (GBP)
\( PSA \) — Personal Savings Allowance: £1,000 (basic rate), £500 (higher rate), £0 (additional rate)
\( Tax\_Rate \) — Marginal tax rate: 20% (basic), 40% (higher), 45% (additional)

Explanation: The calculation first subtracts your Personal Savings Allowance from your total interest. If the result is positive, that amount is taxed at your marginal rate.

3. Importance of Savings Tax Calculation

Details: Understanding your potential tax liability on savings helps with financial planning and ensures you set aside appropriate funds for tax payments. It also helps in deciding between taxable and tax-free savings options.

4. Using the Calculator

Tips: Enter your total savings interest in GBP and select your marginal tax rate. The calculator will determine your applicable Personal Savings Allowance and calculate any tax due.

5. Frequently Asked Questions (FAQ)

Q1: What is the Personal Savings Allowance?
A: The PSA is the amount of savings interest you can earn each tax year without paying tax. It's £1,000 for basic rate taxpayers, £500 for higher rate taxpayers, and £0 for additional rate taxpayers.

Q2: Do I need to declare savings interest?
A: If your total savings interest exceeds your PSA, you may need to declare it on a self-assessment tax return or contact HMRC.

Q3: Are ISA savings included in this calculation?
A: No, interest from ISAs is tax-free and doesn't count toward your PSA or total taxable interest.

Q4: What if I have multiple savings accounts?
A: You must add together interest from all taxable savings accounts when calculating your total interest for tax purposes.

Q5: How often should I calculate my savings tax?
A: It's good practice to calculate potential tax liability annually, before the end of the tax year (5th April).