Tax on savings interest
How you pay tax on savings interest
You pay tax on any interest over your allowance at your usual rate of Income Tax.
How you pay the tax will depend on the amount of interest you earned in the tax year.
If your savings interest is £10,000 or less
After the end of the tax year, your bank or building society tells HMRC how much interest you earned.
If you’re registered for Self Assessment
If you already send a Self Assessment tax return, report any interest earned on savings there.
If you’re employed or get a pension
If you have tax to pay on your savings interest, HMRC will send you a tax calculation. These are usually sent between June and the following March after the tax year ends.
HMRC will usually collect the tax through your tax code. Your tax code may be changed to:
- collect any tax you owe from the previous tax year
- include an estimate of the savings interest you may earn in the current tax year
Example
You need to pay tax on savings interest you earned in the 2025 to 2026 tax year and have not already paid tax on this.
HMRC tells you about the tax due in a tax calculation they send during the 2026 to 2027 tax year. The tax due is usually collected through your tax code in 2027 to 2028.
Your tax codes for 2026 to 2027 and 2027 to 2028 may also include an estimate of tax on savings interest for that tax year. The estimated amount is based on the amount of interest you earned in 2025 to 2026.
If you do not have a tax code or it cannot be changed, HMRC may send a Simple Assessment letter. The letter will explain:
- how much you owe
- how to pay
- when to pay
If you have tax to pay on your savings interest and do not get a letter by 31 March of the following tax year, you must contact HMRC.
If you think the amount of interest is wrong
HMRC adds an estimated amount in your tax code for the current tax year (6 April to 5 April) based on the information given to them by your bank or building society for the previous tax year.
You can see the estimated amount in the Personal Tax Account. Compare this amount with your average monthly interest from your bank and building society if you know it. Multiply that by 12 to get an estimated amount.
If you think the amount HMRC has estimated is incorrect, contact HMRC to update this. You’ll then get a new tax code.
After your bank and building society tells HMRC how much interest you earned at the end of the year, you’ll get a tax calculation letter if you have a tax overpayment or underpayment.
Check your tax calculation letter against your statements, if you think any of the amounts are incorrect contact HMRC.
If your savings interest is more than £10,000
You need tell HMRC how much interest you earned on a Self Assessment tax return. If your bank or building society tells HMRC that you have more than £10,000 in savings interest, HMRC will send you a notice to file a tax return.
If you do not already complete a Self Assessment tax return you’ll need to register. Check if you need to send a tax return if you’re not sure.