UK Savings Calculator

How the UK Savings Calculator Works

Our UK savings calculator projects the future value of your savings based on an initial deposit, monthly contributions, interest rate, and term. It then compares growth inside a tax-free Cash ISA against a taxable savings account, showing exactly how much tax you save by sheltering interest within your ISA allowance. Enter your details to see your final balance, total contributions, total interest, tax saved, and a month-by-month breakdown.

How Savings Interest Is Calculated

Savings interest is typically compounded monthly. Each month, interest is added to your balance based on the annual rate divided by 12, and the following month's interest is calculated on the new, larger balance. Regular monthly contributions accelerate this compounding effect because each deposit starts earning interest immediately.

Monthly Interest = Balance × (APR ÷ 12)
New Balance = Balance + Monthly Interest + Contribution

As a worked example, a £5,000 initial deposit with £200 monthly contributions at 4.5% APR over 5 years grows to roughly £20,390. Total contributions come to £17,000 and total interest to about £3,390. Inside a Cash ISA, all of that interest is tax-free. In a taxable account, a basic-rate taxpayer pays 20% tax on any interest above their £1,000 Personal Savings Allowance.

ISA Allowance 2024/25

The annual ISA allowance for the 2024/25 tax year is £20,000 for adults. You can split this across different ISA types — Cash ISA, Stocks and Shares ISA, Innovative Finance ISA, and Lifetime ISA — but the combined total cannot exceed £20,000. The Junior ISA allowance is £9,000 per child, and this is separate from the adult allowance. Money inside an ISA grows free of income tax and capital gains tax, and withdrawals are tax-free.

Personal Savings Allowance (PSA)

Introduced in 2016, the Personal Savings Allowance lets you earn a set amount of savings interest tax-free outside an ISA. The allowance depends on your income tax band:

• Basic rate taxpayers (20%): £1,000 of tax-free savings interest
• Higher rate taxpayers (40%): £500 of tax-free savings interest
• Additional rate taxpayers (45%): £0 — no Personal Savings Allowance

Any savings interest above your PSA is taxed at your marginal income tax rate. Interest earned inside a Cash ISA does not count towards your PSA and is always tax-free, regardless of how much you earn.

Types of UK Savings Accounts

Different account types suit different savings goals:

• Cash ISA: Tax-free interest up to the £20,000 annual allowance. Ideal for taxpayers whose interest exceeds their PSA.
• Regular Savings: Often the highest rates, but with monthly deposit limits (typically £50–£500/month) and withdrawal restrictions.
• Easy Access: Flexible withdrawals at any time, but rates are usually lower and can change at the provider's discretion.
• Fixed Rate Bond: Locks your money away for a set term (1–5 years) in exchange for a guaranteed rate. No withdrawals until maturity.
• Junior ISA (JISA): For under-18s with a £9,000 annual allowance. Funds are locked until the child turns 18, then roll into an adult ISA.

ISA vs Taxable Savings — Which Is Better?

If your total savings interest stays within your Personal Savings Allowance, a taxable account with a higher rate may deliver better net returns because you pay no tax anyway. However, once interest exceeds the PSA — or if you are an additional rate taxpayer with no PSA at all — a Cash ISA becomes the clear winner because every pound of interest is sheltered from tax. Over long terms and large balances, the tax saving compounds significantly. Use this calculator to model both scenarios side by side and see which route leaves you better off.

What This Calculator Does Not Include

• Inflation: The purchasing power of your final balance will be lower in real terms. Use a separate inflation calculator for real-returns analysis.
• Variable rates: Easy access and regular saver rates can change during the term. This calculator assumes a fixed rate throughout.
• Stocks and Shares ISAs: Investment returns are variable and not covered here. This tool models cash savings only.
• Lifetime ISA bonus: The 25% government bonus on £4,000 of Lifetime ISA contributions is not modelled in this calculator.