Final balance after 10 years: £31,648. Gross interest earned £6,648.
Saving £1,000 now plus £200 a month at 4.5% for 10 years would grow to about £31,648 — that's £6,648 of interest on the £25,000 you put in.
After 2.5% inflation, that's worth about £24,723 in today's money — what it would actually buy at today's prices.
As a basic-rate taxpayer your Personal Savings Allowance is £1,000 of interest a year. About £91 tax may be due over this period, leaving £6,557 interest after tax. An ISA would keep it all tax-free.
Monthly vs annual: with interest added monthly, your deposits start earning sooner, which earns about £603 more here. A lump sum on its own earns the same either way, because the AER already includes compounding.
Reach a savings goal
To reach £10,000 in 10 years (with your £1,000 start at 4.5% AER), save about £57/month.
Growth over time
Deposits vs interest
Year-by-year figures
| Year | Deposited | Interest | Balance |
| 0 | £1,000 | £0 | £1,000 |
| 2 | £5,800 | £300 | £6,100 |
| 4 | £10,600 | £1,070 | £11,670 |
| 6 | £15,400 | £2,353 | £17,753 |
| 8 | £20,200 | £4,195 | £24,395 |
| 10 | £25,000 | £6,648 | £31,648 |
Example saving plans
At your 4.5% rate. Tap to load a plan.
How much interest your savings earn in a year
At 4.5% AER, with nothing added or taken out. Tax is worked out on the interest above your Personal Savings Allowance: £1,000 for a basic-rate taxpayer and £500 at the higher rate. In an ISA you keep all the interest.
| Savings | Interest a year | Basic-rate taxpayer keeps | Higher-rate taxpayer keeps |
|---|---|---|---|
| £1,000 | £45 | £45 | £45 |
| £5,000 | £225 | £225 | £225 |
| £10,000 | £450 | £450 | £450 |
| £20,000 | £900 | £900 | £740 |
| £50,000 | £2,250 | £2,000 | £1,550 |
| £100,000 | £4,500 | £3,800 | £2,900 |
At 4.5%, a basic-rate taxpayer can hold about £22,200 before any interest is taxed, and a higher-rate taxpayer about £11,100. The allowance covers interest from all your accounts together. The AER already includes compounding, so a year's interest is the balance times the AER however often the interest is paid.
£20,000 at different interest rates
| AER | Interest a year | Basic-rate taxpayer keeps | Higher-rate taxpayer keeps |
|---|---|---|---|
| 3% | £600 | £600 | £560 |
| 3.5% | £700 | £700 | £620 |
| 4% | £800 | £800 | £680 |
| 4.5% | £900 | £900 | £740 |
| 5% | £1,000 | £1,000 | £800 |
Change the rate, the amount or add monthly saving in the calculator above to see your own figures over more than a year.
What's changing
- Savings tax and cash ISA changes from April 2027: who is affected
Money Insights · Updated
Proposed savings rates are 24%, 44% and 49%. The announced cash ISA limit is £20,000 for eligible adults, subject to legislation.
- Bank Rate rises to 4%: what changes for your mortgage and savings?
Money Insights · Published
The Bank's November decision does not change every account by the same amount. Compare tracker, variable and fixed products, with clearly labelled mortgage and savings illustrations.
Frequently asked questions
How is compound interest calculated?
Compound interest pays interest on your interest as well as your original deposit, so your balance grows faster over time. This calculator compounds monthly: each month interest is added to the balance, and the next month earns interest on the new, larger total — alongside any regular deposits you make.
What is AER and how does it differ from the headline rate?
AER (Annual Equivalent Rate) shows what you would earn in a year taking compounding into account, so it lets you compare accounts fairly. A 5% AER account that pays interest monthly has a slightly lower monthly rate that compounds up to 5% over the year.
Do I pay tax on savings interest?
Most people have a Personal Savings Allowance of £1,000 of interest tax-free (basic-rate taxpayers) or £500 (higher-rate); additional-rate taxpayers get none. Interest above your allowance is taxed at your income tax rate. Interest earned inside an ISA is always tax-free.
How much can I put in an ISA?
You can pay in up to £20,000 across all your ISAs in the 2026/27 tax year. Interest and growth inside an ISA are completely tax-free and do not use up your Personal Savings Allowance, which makes ISAs useful once your savings interest gets close to the allowance.
Is my money safe?
Money held with a UK bank or building society authorised by the PRA is protected by the FSCS up to £120,000 per eligible person, per UK-authorised firm, if the provider fails — the limit rose from £85,000 on 1 December 2025. It applies per authorised firm, not per brand: some brands share a single banking licence, so they also share one £120,000 limit. If you have more than that, spreading it across separately authorised firms keeps it all protected.
Related calculators & guides
Sources & assumptions
- HMRC — Tax on savings interest (PSA) ↗
- gov.uk — Individual Savings Accounts (ISAs) ↗
- FSCS — deposit protection limit ↗
Last reviewed November 2026 against official rates · How we calculate →
This is an illustrative projection assuming a constant interest rate and regular deposits. Real savings rates change over time and may not keep pace with inflation. Interest is paid gross; any tax due (estimated here from your Personal Savings Allowance, 2026/27 rates) is collected separately and not taken from the account. ISA limits apply. This is not financial advice.
Embed this calculator on your site
Free to use — paste this into your page. It keeps a small credit link back to PayCalc UK.