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UK Savings Interest Tax Formula:
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The UK Savings Interest Tax Calculator estimates the tax payable on savings interest based on your marginal tax rate and Personal Savings Allowance (PSA). It helps UK taxpayers understand their potential tax liability on interest earned from savings accounts.
The calculator uses the UK tax formula for savings interest:
Where:
Explanation: The calculation determines how much of your savings interest exceeds your PSA, then applies your marginal tax rate to that amount.
Details: The PSA is the amount of savings interest you can earn each year without paying tax:
Tips: Enter your total savings interest in GBP, select your marginal tax rate, and click calculate. The calculator will show your tax liability and applicable PSA.
Q1: Who needs to pay tax on savings interest?
A: Only those whose savings interest exceeds their Personal Savings Allowance need to pay tax on the excess amount.
Q2: How is the PSA determined?
A: Your PSA depends on your income tax band: £1,000 for basic rate, £500 for higher rate, and £0 for additional rate taxpayers.
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 may be required in some cases.
Q4: Are all savings accounts taxable?
A: Most savings accounts generate taxable interest, but ISAs (Individual Savings Accounts) are tax-free regardless of the amount.
Q5: What if I have multiple savings accounts?
A: You must add together interest from all taxable savings accounts to determine if you exceed your PSA threshold.