1. What is the Savings Tax Calculator?

The Savings Tax Calculator estimates the tax payable on savings interest in the UK based on your marginal tax rate and Personal Savings Allowance (PSA). It helps you understand how much tax you might owe on your savings income.

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

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

Explanation: The calculation determines how much of your savings interest exceeds your PSA, then applies your marginal tax rate to that amount.

3. Understanding Personal Savings Allowance (PSA)

Details: The PSA is the amount of savings interest you can earn each year without paying tax:

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

4. Using the Calculator

Tips: Enter your total savings interest in GBP and select your marginal tax rate. The calculator will automatically determine your PSA and calculate any tax due.

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 for the tax year.

Q2: How is PSA determined?
A: Your PSA depends on your income tax band. Basic rate taxpayers get £1,000, higher rate get £500, and additional rate taxpayers get no allowance.

Q3: Do I need to declare savings interest?
A: If your total savings interest is below your PSA, you don't need to do anything. If it exceeds your PSA, you may need to complete a self-assessment tax return.

Q4: Are ISA savings included?
A: No, interest from ISA savings is tax-free and doesn't count toward your PSA calculation.

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