How the savings calculator works
The calculator adds your monthly saving to your balance at the end of each month and grows the balance by the monthly equivalent of the interest rate. UK savings accounts quote rates as an AER (annual equivalent rate), so the calculator converts the AER into the matching monthly rate:
Each month: balance = balance × (1 + monthly rate) + monthly saving
At 4% AER the monthly rate is about 0.327%. If you enter a goal, the calculator keeps going month by month until your balance reaches it, and tells you how long that takes. It assumes the rate stays the same, which is rarely true for variable-rate accounts, so revisit your plan when rates change.
Worked example: saving for a house deposit
You have £1,000 saved and put away £200 a month at 4% AER, aiming for £15,000:
- After 5 years you've paid in £13,000 and your balance is £14,452.46, so £1,452.46 is interest.
- You reach £15,000 after 5 years 3 months.
- Interest in the first year is about £84, well inside the Personal Savings Allowance.
Saving £250 a month from scratch at 3.5% AER, you'd hit £10,000 in 3 years 2 months. Saving £500 a month at 4%, you'd reach £50,000 in 7 years 3 months.
How much tax will I pay on savings interest?
Most people pay no tax on savings interest thanks to these allowances:
| Allowance | Tax-free interest a year |
|---|---|
| Personal Savings Allowance: basic-rate taxpayer | £1,000 |
| Personal Savings Allowance: higher-rate taxpayer | £500 |
| Personal Savings Allowance: additional-rate taxpayer | £0 |
| Starting rate for savings | Up to £5,000 if your other income is under £17,570 |
The starting rate for savings shrinks by £1 for every £1 of other income above your £12,570 Personal Allowance. Interest above your allowances is taxed at your income tax rate. Savings tax rates are due to rise by 2 percentage points from April 2027, to 22%, 42% and 47%, which makes sheltering savings in an ISA even more worthwhile.
ISA allowance for 2026/27
You can pay up to £20,000 into ISAs in the 2026/27 tax year, split however you like between cash ISAs, stocks and shares ISAs and the other types. Interest and growth inside an ISA is tax-free and doesn't use your Personal Savings Allowance.
From 6 April 2027 the rules change for cash ISAs. The overall allowance stays at £20,000, but if you're under 65 only £12,000 of it can go into cash ISAs. The other £8,000 can go into a stocks and shares ISA. People aged 65 and over keep the full £20,000 cash ISA limit. That makes 2026/27 the last tax year in which under-65s can put the whole £20,000 into cash.
Tips to reach your savings goal faster
- Automate it. Set up a standing order for payday so the money moves before you can spend it.
- Shop around for rates. The gap between the best easy-access accounts and a typical high street account can be several percentage points.
- Consider regular savers. These often pay higher rates but cap monthly deposits, usually for a year.
- First home? A Lifetime ISA adds a 25% government bonus on up to £4,000 a year if you're 18 to 39 when you open it.
- Clear expensive debt first. Credit card interest is usually far higher than any savings rate. The credit card repayment calculator shows the cost.
Saving for longer than five years? Have a look at how investing could grow on the compound interest calculator, or see how much you could borrow for a home with the mortgage affordability calculator.
Frequently asked questions
How much will I have if I save £200 a month for 5 years?
You'll pay in £12,000. At 4% AER that grows to about £13,236 after 5 years, so roughly £1,236 is interest.
How long will it take to save £10,000?
Saving £250 a month at 3.5% AER takes 3 years 2 months. Saving £500 a month at the same rate takes about 1 year 8 months.
What is the ISA allowance for 2026/27?
The ISA allowance is £20,000 for 2026/27, and all of it can go into a cash ISA. From April 2027, under-65s will be limited to £12,000 a year in cash ISAs within the same £20,000 total.
Do I pay tax on my savings interest?
Only on interest above your Personal Savings Allowance: £1,000 a year for basic-rate taxpayers, £500 for higher-rate and nothing for additional-rate taxpayers. Interest in an ISA is always tax-free.
What is AER on a savings account?
AER stands for annual equivalent rate. It shows the interest you'd earn over a year including the effect of compounding, so you can compare accounts that pay interest monthly with those that pay yearly.
Last reviewed October 2026 using 2026/27 figures. This calculator gives an estimate for guidance only.