Savings Interest and Tax Calculator

Almost every savings calculator gives you a gross interest figure and stops there. Interest is taxable income, and three separate allowances sit in front of it, in a specific order. Miss them and you either overestimate what you keep or panic unnecessarily about a tax bill that is not coming.

Unused personal allowance. If your other income is below £12,570 the unused part shelters interest first.

The starting rate for savings. Up to £5,000 of interest at 0%, but it shrinks by a pound for every pound of other income above the personal allowance, and it is gone once other income reaches £17,570. This is the one almost nobody uses, and it is genuinely valuable in a year with little salary: a career break, the first year of retirement before a pension starts, a gap between jobs.

The personal savings allowance. £1,000 for a basic-rate taxpayer, £500 for a higher-rate taxpayer, and nothing at all for an additional-rate taxpayer.

"The allowance is set by the band you land in after the interest is counted, so interest that tips you into higher rate halves your allowance and taxes the rest at 40%."