Savings Interest Calculator UK
Work out interest on your UK savings. Enter your balance, AER and term to see the interest earned, your closing balance and your Personal Savings Allowance.
Last updated 21 June 2026 · Written and reviewed by Mustafa Bilgic
Savings interest calculator
AER, closing balance and tax allowance.
Estimate only — figures use the latest published UK rates. Always confirm on GOV.UK.
How much interest will my savings earn?
Savings interest is usually quoted as an AER (Annual Equivalent Rate), which already factors in how often interest is paid and compounded. To estimate your interest, you apply the AER to your balance for the period you save. This calculator shows the interest earned and your closing balance, and it also checks your Personal Savings Allowance to flag whether any tax might be due.
£10,000 saved at 4.5% AER for 1 year earns about £450 in interest, taking your balance to £10,450 — and a basic-rate taxpayer pays no tax because it is within the £1,000 allowance.
The Personal Savings Allowance
| Tax band | Tax-free savings interest |
|---|---|
| Basic rate (20%) | £1,000 |
| Higher rate (40%) | £500 |
| Additional rate (45%) | £0 |
Source: GOV.UK — Tax on savings interest. Interest inside an ISA is always tax-free.
AER, gross rate and compounding
AER is the figure to compare accounts on, because it standardises for how often interest is added. A gross rate is the rate before any compounding. If interest is paid monthly and left in the account, it compounds — so over several years you earn a little interest on your interest. For multi-year periods this calculator compounds annually to give a realistic closing balance.
Beating tax and inflation
If your interest is likely to exceed your Personal Savings Allowance, a cash ISA shelters it from tax entirely. It is also worth comparing your rate with inflation — if prices are rising faster than your interest, your money is losing real value. To see how regular saving grows over time, try our compound interest calculator. The MoneyHelper service has guides on choosing savings accounts.
Frequently asked questions
How is savings interest calculated?
Apply the account's AER to your balance for the time you save. For one year, £10,000 at 4.5% AER earns about £450. Over several years interest compounds, so you also earn interest on previous interest.
What is AER?
AER stands for Annual Equivalent Rate. It shows what you would earn in a year taking compounding into account, so it is the fairest way to compare savings accounts that pay interest at different frequencies.
Do I pay tax on savings interest?
Most people do not. The Personal Savings Allowance lets basic-rate taxpayers earn £1,000 of interest tax-free, higher-rate taxpayers £500, and additional-rate taxpayers nothing. Interest inside an ISA is always tax-free.
How can I avoid tax on savings interest?
Use a cash ISA, where all interest is tax-free regardless of the amount, or keep your interest within your Personal Savings Allowance. Spreading savings between partners can also use two allowances.
Is my interest keeping up with inflation?
Compare your AER with the current inflation rate. If inflation is higher than your savings rate, the real spending power of your money is falling even though the cash balance is growing.