Answers · UK 2025/26
How much tax do I pay on £2,000 of savings interest in 2026/27?
The tax on £2,000 of savings interest in 2026/27 depends on your other income. A basic-rate taxpayer with a £1,000 Personal Savings Allowance pays 20% on £1,000, which is £200. A higher-rate taxpayer with a £500 allowance pays 40% on £1,500, which is £600. An additional-rate taxpayer pays 45% on the full £2,000, which is £900.
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Tax on savings interest is worked out after your Personal Savings Allowance (PSA), which varies by tax band for 2026/27. A basic-rate taxpayer gets a £1,000 PSA, so £2,000 of interest leaves £1,000 taxable at 20%, giving £200 of tax. A higher-rate taxpayer gets a £500 PSA, so £1,500 is taxable at 40%, giving £600 of tax. An additional-rate taxpayer gets no PSA, so the whole £2,000 is taxable at 45%, giving £900. If your non-savings income is low, the starting rate for savings can also apply, giving up to £5,000 of savings interest at 0% where your other income is below £17,570, which can wipe out the tax entirely for low earners. Interest held inside a cash ISA or stocks and shares ISA is always tax-free and does not count towards the £2,000 at all, so the simplest way to avoid this tax is to hold savings within your £20,000 ISA allowance. Banks and building societies report the interest they pay you to HMRC automatically, so you do not usually need to declare modest amounts; HMRC collects any tax due by adjusting your tax code or through Self Assessment if you complete a return. If your interest is large or your circumstances are complex, a Self Assessment return may be required. Use the Savings Interest calculator to enter your income and interest and see exactly how much tax is due.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.