1. What Is The Savings Tax Calculator?

The Savings Tax Calculator estimates the tax payable on savings interest based on your marginal tax rate and Personal Savings Allowance (PSA) according to UK tax rules for the 2023 tax year.

2. How Does The Calculator Work?

The calculator uses the formula:

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 determines how much of your savings interest exceeds your tax-free allowance, then applies your marginal tax rate to that amount.

3. Importance Of Tax Calculation

Details: Accurately calculating savings tax helps with financial planning, ensures tax compliance, and helps avoid unexpected tax bills at the end of the tax year.

4. Using The Calculator

Tips: Enter your total savings interest in GBP and select your marginal tax rate. The calculator will automatically determine your 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 that is completely tax-free. It varies based on your income tax band.

Q2: Who qualifies for which PSA amount?
A: Basic rate taxpayers get £1,000, higher rate taxpayers get £500, and additional rate taxpayers get £0 allowance.

Q3: Do I need to declare savings interest?
A: You may need to declare savings interest if it exceeds your PSA, or if you're required to complete a self-assessment tax return.

Q4: Are ISAs included in this calculation?
A: No, interest from Individual Savings Accounts (ISAs) is tax-free and should not be included in your taxable interest calculation.

Q5: What if I have multiple savings accounts?
A: You must add together interest from all taxable savings accounts to calculate your total taxable interest.