With the Chancellor considering a change to the Cash ISA annual allowance, now is a good time to understand how to use your Personal Savings Allowance (PSA) to earn tax-free interest. Use this calculator to work out how much you can shield from tax.
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Our Personal Savings Allowance (PSA) calculator is designed to help you check if you’ve gone over your PSA.
We’ll use a couple of details about your savings to make an estimate. As part of our calculations, we’ll apply the following assumptions:
Your Personal Savings Allowance (PSA) is the amount of tax-free interest you can earn in each tax year. The tax year runs from 6 April in one year to 5 April in the next.
Your PSA depends on which income tax band you’re in:
Your PSA applies to interest earned from the following:
Interest from money held in a Cash ISA doesn’t count towards your PSA.
That’s because Cash ISAs are a special type of savings account where you can earn interest tax-free.
Currently, the ISA allowance is £20,000. You split this between different types of ISA accounts, including Cash ISAs, Stocks and Shares ISAs and Lifetime ISAs.
It’s worth noting that some National Savings and Investments (NS&I) accounts don’t count towards your allowance either.
Potentially! You might need to pay tax on your savings in the UK if you go over your PSA.
If you go over your PSA, HMRC usually collects the tax automatically by changing your tax code. However, in some cases, you’ll need to pay using a self-assessment tax return instead.
If you have a joint savings account, the interest earned is split equally between each account holder.
For example, if a couple earns £1,000 in interest from a joint savings account, each person receives £500 in interest.
Couples that are married or in a civil partnership can apply to HMRC to change the split of the interest.
For instance, if one partner has a higher PSA it might be financially beneficial to give them a larger share of the interest split to keep it tax-free.
You might be able to reclaim tax back if you’ve paid too much.
To do this you’ll need to contact HMRC within 4 years of the end of the tax year you overpaid.
You can submit it as part of a self-assessment tax return if you fill one out. Or, you can make a claim on GOV.UK.
This calculator is for illustrative purposes only and is intended to give you an estimate of any tax you might have to pay based on the information you provide.
Tax treatment is subject to individual circumstances. Any reference to taxes, reliefs or rates is based on the rules in place as at 06/04/2025 and is subject to change.
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