Savings Interest Calculator

How Savings Interest Works in the UK

When you deposit money in a UK savings account, the bank pays you interest as a reward for keeping your money with them. The rate you earn depends on the type of account, the amount deposited, and prevailing market conditions influenced by the Bank of England base rate.

Easy Access vs Fixed Rate Savings

Easy access accounts let you withdraw money at any time but typically offer lower rates. Current UK averages are around 4.75%.

Fixed rate accounts lock your money away for a set period (usually 1-5 years) in exchange for a higher guaranteed rate. One-year fixed rates currently average 4.4% and two-year fixed rates average 4.15%.

The Impact of Inflation

Earning 4.75% interest sounds good, but if inflation is running at 3%, your real purchasing power gain is only around 1.75%. Toggle the inflation option in the calculator above to see what your savings will actually be worth in real terms.

Tax on Savings Interest

Most UK savers pay no tax on their savings interest thanks to the Personal Savings Allowance (PSA): basic rate taxpayers can earn up to £1,000 in interest tax-free, and higher rate taxpayers up to £500. If you're likely to exceed your PSA, consider an ISA where interest is completely tax-free.

Frequently Asked Questions

How much interest will I earn on my savings?

The interest you earn depends on three factors: the amount saved, the interest rate, and how long you save. For example, £10,000 at 4.75% for one year earns approximately £475 before tax. Use the calculator above with your specific numbers.

What is a good savings interest rate in the UK in 2026?

With the Bank of England base rate at 4.5%, competitive easy-access rates are around 4.5–5%, and one-year fixed rates around 4.2–4.5%. Anything above the base rate is generally considered competitive.