Savings Interest Tax Calculator Uk

UK Savings Interest Tax Formula:

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

Tax Amount:

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What is the UK Savings Interest Tax Calculator?

The UK Savings Interest Tax Calculator helps determine how much tax you need to pay on your savings interest based on your income tax band and the Personal Savings Allowance (PSA). It calculates the tax using the formula: Tax = max(0, Interest - PSA) × Tax Rate.

2. How Does the Calculator Work?

The calculator uses the UK savings interest tax formula:

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

Where:

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

PSA Values:

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

3. Understanding Personal Savings Allowance (PSA)

Details: The Personal Savings Allowance (PSA) is the amount of savings interest you can earn each year without paying tax. The allowance depends on your income tax band. Basic rate taxpayers get £1,000, higher rate taxpayers get £500, and additional rate taxpayers get no allowance.

4. Using the Calculator

Tips: Enter your total savings interest in GBP and select your appropriate tax rate band. The calculator will automatically determine your PSA and calculate any tax due on interest above your allowance.

5. Frequently Asked Questions (FAQ)

Q1: Who needs to pay tax on savings interest?
A: You may need to pay tax if your savings interest exceeds your Personal Savings Allowance, which depends on your income tax band.

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: Do I need to declare savings interest?
A: Banks typically report interest to HMRC. If you're employed or receive a pension, HMRC will usually adjust your tax code. Self-assessment taxpayers must declare interest.

Q4: What counts as savings interest?
A: Interest from bank accounts, building societies, credit unions, and certain other savings products.

Q5: Are ISAs included in this calculation?
A: No, interest from ISAs is tax-free and doesn't count toward your PSA or taxable interest.