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Tax Calculation Formula:
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The Tax on Savings Interest calculation determines the amount of tax payable on interest earned from savings accounts in the UK for the 2022 tax year, based on the applicable tax rate for your income bracket.
The calculator uses the simple tax formula:
Where:
Explanation: The calculation multiplies the interest earned by the tax rate percentage to determine the tax amount payable.
Details: Accurate tax calculation on savings interest is essential for proper tax reporting, compliance with HMRC requirements, and financial planning to avoid underpayment or overpayment of taxes.
Tips: Enter the total interest earned in GBP and the applicable tax rate percentage based on your UK income tax bracket for 2022. Both values must be valid (interest ≥ 0, tax rate between 0-100%).
Q1: What are the UK tax brackets for savings interest in 2022?
A: Basic rate taxpayers pay 20%, higher rate taxpayers pay 40%, and additional rate taxpayers pay 45% on savings interest above their personal savings allowance.
Q2: Is there a tax-free allowance for savings interest?
A: Yes, most UK taxpayers get a personal savings allowance: £1,000 for basic rate taxpayers, £500 for higher rate taxpayers, and £0 for additional rate taxpayers.
Q3: When do I need to pay tax on savings interest?
A: Tax on savings interest is typically collected through self-assessment tax returns or through adjustment of your tax code if you're employed.
Q4: Are all savings accounts taxable?
A: Most savings accounts are taxable, but ISAs (Individual Savings Accounts) offer tax-free interest up to the annual ISA allowance.
Q5: What if my bank has already deducted tax?
A: Most UK banks now pay interest gross (without tax deduction). You are responsible for declaring and paying any tax due through self-assessment.