Find the interest and value at maturity of a UK fixed-term savings account, with the quoted AER and how the Personal Savings Allowance affects any tax.
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A fixed-term deposit usually pays simple interest over the term. In the UK savings interest is covered by the Personal Savings Allowance (£1,000 basic / £500 higher rate); above that it is taxed via HMRC.
Net interest 400 £ · Value at maturity 10,400 £Standard financial formulas (time value of money). Instant in-browser calculation, no account, no data sent. Rates are indicative — check the bank’s actual offer. Last updated: 11 July 2026 · Personal Savings Allowance (gov.uk).
⚖︎ Results are for informational purposes and do not constitute tax advice. For specific situations, consult a licensed accountant or the relevant tax authority.
UK banks quote deposit rates as an AER; interest is compounded and paid, and any interest above your Personal Savings Allowance is taxable:
At £10,000, 4% AER, over 12 months: gross interest ≈ £407. Within your Personal Savings Allowance this is tax-free, giving a value at maturity of ≈ £10,407.
It is money placed with a bank for a fixed period (for example 6, 12 or 24 months) at a set interest rate — often called a fixed-rate savings bond. At maturity you receive the initial amount plus the interest.
Interest applies to the deposited amount and is quoted as an AER. At £10,000 with a 4% AER over 12 months, gross interest is about £407.
In the UK, savings interest is covered by the Personal Savings Allowance — £1,000 tax-free for basic-rate taxpayers, £500 for higher-rate and £0 for additional-rate. Interest above your allowance is taxed at your income tax rate; banks no longer deduct it at source, so HMRC collects it via your tax code or Self Assessment.
Banks report the interest they pay directly to HMRC. If your total interest exceeds your Personal Savings Allowance, HMRC usually collects the tax by adjusting your tax code; some higher earners report it through Self Assessment.
The Annual Equivalent Rate shows the interest you would earn over a year including the effect of compounding, so you can compare accounts on a like-for-like basis. UK providers are required to quote it.
Interest is fixed for the term. Eligible deposits are also protected up to £85,000 per person, per banking group, by the Financial Services Compensation Scheme (FSCS).
With most fixed-term accounts you cannot access the money early, or you lose a chunk of the interest as a penalty. Always check the early-access terms before locking money away.
It depends. If the interest after any tax is below the inflation rate, purchasing power falls in real terms. Always compare the net return with the estimated annual inflation.