How to Pay Tax on Savings Interest Above Your Personal Savings Allowance (2026/27)

How HMRC learns about your interest, collects the tax through your tax code or Simple Assessment, how to fix a wrong estimate and when you need a tax return.

2026/27 tax year

Savings & Investment
Personal
UK-wide

Summary

After 5 April each year your bank or building society tells HMRC how much interest it paid you, and HMRC adds together the interest from all your accounts.
If your savings interest is £10,000 or less and you are employed or get a pension, HMRC usually sends a tax calculation between June and the following March and collects the tax through your tax code.
Your tax code can also carry an estimate of this year's interest, based on last year's figures; check it in your Personal Tax Account and contact HMRC if it is wrong.
If your savings interest is more than £10,000 you must report it on a Self Assessment tax return, registering first if you do not already send one.
If you have tax to pay on interest and get no letter by 31 March of the following tax year, GOV.UK says you must contact HMRC.

This guide is general information, not advice.

This guide is for savers whose interest has gone over their tax-free allowances, or who have had a letter or a tax code change from HMRC about savings interest and want to know what to do. It is the procedure. How much interest is tax-free, and how the Personal Savings Allowance changes with your tax band, is in our Personal Savings Allowance explainer.

By the end you will know how HMRC finds out about your interest, how it collects the tax, how to correct a wrong estimate, and when you have to file a tax return instead.

Before you start

Have these ready:

your Government Gateway sign-in for your Personal Tax Account, or be ready to create one;
your National Insurance number;
year-end interest statements from every bank, building society and credit union account in your name, including joint accounts;
your latest PAYE coding notice, if HMRC has sent one;
your total wages or pension for the year.

Interest from an ISA does not count. GOV.UK says you do not usually pay tax on interest from ISAs and some National Savings and Investments products. Foreign savings and children’s accounts have different rules.

Step-by-step

Check whether you owe anything at all. For 2026/27 your interest can be covered by any unused Personal Allowance, the £5,000 starting rate for savings (only if your other taxable income is under £17,570) and the Personal Savings Allowance of £1,000 for basic-rate or £500 for higher-rate taxpayers, per GOV.UK’s Tax on savings interest. HMRC’s dividends and savings checker gives an estimate, but you cannot use it if you file Self Assessment, have foreign income, or get Marriage Allowance or Blind Person’s Allowance, and you need tax code 1257L.
Let the bank report it. GOV.UK says that after 5 April each year your bank or building society tells HMRC about any interest it paid you for the previous year. HMRC adds together the interest from all your accounts. For a joint account it splits the interest equally between the holders; if that is wrong, contact HMRC.
Find which route applies to you. GOV.UK’s how you pay tax on savings interest splits it by amount:
- Interest of £10,000 or less, and you already send a tax return: report the interest on your Self Assessment return.
- Interest of £10,000 or less, and you are employed or get a pension: do nothing yet. HMRC sends you a tax calculation if you owe tax.
- Interest over £10,000: you must report it on a Self Assessment return. Go to step 7.
Read the tax calculation when it arrives. GOV.UK says these are usually sent between June and the following March after the tax year ends, as a letter or a notification in your Personal Tax Account. It shows the tax owed for the previous year and usually breaks the interest down by account. Check each figure against your statements.
Let HMRC collect it through your tax code. HMRC will usually change your tax code to collect what you owe from the previous year and to include an estimate of the interest you may earn in the current year. GOV.UK’s own example: tax on interest earned in 2025/26 is notified in a calculation sent during 2026/27 and usually collected through your 2027/28 tax code, and the 2026/27 and 2027/28 codes may also carry an estimate based on 2025/26 interest. Our guide to reading a PAYE coding notice shows where these adjustments appear.

If you have no tax code or it cannot be changed, HMRC may send a Simple Assessment letter (PA302) instead, saying how much, how and when to pay.
Correct the estimate if it is wrong. Sign in to Check your Income Tax for the current year or your Personal Tax Account and find the estimated interest. GOV.UK suggests taking your average monthly interest and multiplying by 12 to compare. If HMRC’s figure is wrong, contact HMRC through the Income Tax enquiries route; you will then get a new tax code. If you have overpaid, HMRC asks your employer or pension provider to refund the difference through your pay or pension.
Over £10,000: use Self Assessment. GOV.UK says that if your bank tells HMRC you have more than £10,000 of interest, HMRC sends you a notice to file a return. If you do not already file, you need to register for Self Assessment; our registration guide walks through it.

Deadlines and what happens next

Tax calculation: usually sent between June and the following March after the tax year ends. If you have tax to pay and no letter by 31 March of the following tax year, GOV.UK says you must contact HMRC.
Self Assessment (interest over £10,000): for the 2025/26 tax year, GOV.UK’s deadlines page says to register by 5 October 2026 if you have not sent a return before, file online by 31 January 2027 (paper by 31 October 2026) and pay by 31 January 2027.
Refunds for earlier years: if your total income was below your Personal Allowance, you can claim back tax on interest within 4 years of the end of the tax year, on your tax return, by contacting HMRC, or with form R40.

Interest over your allowances is taxed at your usual Income Tax rate. In Scotland, GOV.UK says you pay the same tax as the rest of the UK on savings interest. HMRC’s November 2025 policy paper says savings rates rise by 2 percentage points from April 2027; interest earned in 2026/27 is still taxed at 2026/27 rates even if it is collected through a later code.

Common mistakes

Counting ISA interest. It is not taxable and is not part of the total.
Assuming a joint account is all yours, or all your partner’s. HMRC splits it equally unless you tell it otherwise.
Ignoring the estimate in your code. If you moved your savings or rates fell, last year’s interest can overstate this year’s. Correct it rather than wait for a refund.
Waiting for a letter that never comes. If you owe tax and have heard nothing by 31 March of the following tax year, the duty to contact HMRC is yours.
Using the checker when you file Self Assessment. HMRC says it is not for you; report the interest on your return.

Worked example

Three savers in England in 2026/27, each with interest from ordinary bank accounts. Figures from the 2026/27 allowances on GOV.UK and Income Tax rates.

	Saver A	Saver B	Saver C
Wages or pension	£40,000 salary	£60,000 salary	£14,000 pension
Savings interest	£1,800	£1,800	£3,000
Band (interest added to other income)	Basic rate	Higher rate	Basic rate
Starting rate for savings left	£0	£0	£3,570
Personal Savings Allowance	£1,000	£500	£1,000
Taxable interest	£800	£1,300	£0
Tax on interest	£160 at 20%	£520 at 40%	£0

Saver C’s pension uses the £12,570 Personal Allowance and £1,430 of the £5,000 starting rate, so the remaining £3,570 covers all the interest. Savers A and B are both under £10,000 of interest, so if neither files a return, HMRC sends each a tax calculation after 2026/27 ends and usually collects the tax through a later tax code.

Personal Savings Allowance - the allowance by tax band, explained.
Savings tax calculator - work out the tax on your own interest.
How to read a PAYE coding notice - where savings interest shows up in your code.

Frequently asked questions

Do I need to tell HMRC about my savings interest?

Usually not if your interest is £10,000 or less and you do not send a tax return. GOV.UK says your bank or building society tells HMRC after 5 April what it paid you, and HMRC sends a tax calculation if you owe tax. If you have tax to pay and get no letter by 31 March of the following tax year, you must contact HMRC. Above £10,000 you must use a Self Assessment return.

Why has HMRC put savings interest in my tax code?

HMRC adds an estimate of your interest for the current tax year, based on what your bank or building society reported for the previous year, so the tax is collected as you go. The same code can also collect tax you owe from the previous year. You can see the estimate in your Personal Tax Account and ask HMRC to change it if it is wrong.

How is interest on a joint account taxed?

GOV.UK says HMRC splits the interest equally between the account holders. If you think it should be split differently, contact HMRC through the Income Tax enquiries route.

What if HMRC cannot collect the tax through my tax code?

If you do not have a tax code or it cannot be changed, HMRC may send a Simple Assessment letter, also known as a PA302. It tells you how much you owe, how it was worked out, how to pay and when to pay.

Can I get back tax I paid on interest in an earlier year?

GOV.UK says you can claim back tax paid on savings interest if your total income was below your Personal Allowance, within 4 years of the end of the tax year concerned. Claim on your tax return if you send one, or contact HMRC or use form R40 if you do not.