Because interest is paid on money while it sits in the account, and a regular saver's money arrives a month at a time. Nothing is wrong — here is why.
Because interest is paid on money while it sits in the account — and a regular saver's money arrives a month at a time. Your January deposit spends eleven months earning; December's spends none. Paying £100 a month at 7% — an example rate, yours to change on the calculator — puts £1,200 in over the year and earns £38.04 under the calculator's stated end-of-month convention: an effective 3.17% of everything deposited, roughly half the headline. The bank has not short-changed you; the arithmetic was always going to land there.
| Tax/source year | 2026/27 |
|---|---|
| Region | UK-wide: savings interest is taxed on the UK bands and thresholds in every UK nation, including for Scottish taxpayers |
| Account rates | Never assumed. Any interest rate in a savings calculation is an input you set, stated beside the result. |
| Your other income | Wages and pension income decide how much Personal Allowance and starting rate are left for interest, and which Personal Savings Allowance band applies. |
|---|---|
| The interest itself | Interest counts towards the income that sets your band, so a large interest year can shrink the allowance that was meant to cover it. |
| The account's wrapper | The same balance at the same rate is taxed outside an ISA and untouched inside one; the wrapper, not the rate, decides whether the allowances are needed. |
| Run your own figures on the savings hub | calculator next step |
|---|---|
| Review calculation sources and methodology | source context |
| What is not decided here | PayBreakdown does not decide payroll correctness, lender approval, benefit entitlement or employer compliance, and does not give regulated financial, mortgage, debt, tax, payroll or legal advice. |
|---|
The instinct is to multiply the advertised rate by everything you paid in, as if the whole year's deposits sat in the account from January. They did not: averaged across the year, the account holds about half of what it ends with, so the interest lands near half the naive figure. An annual rate on a growing balance is not a discount or a trick — it is the same arithmetic a mortgage or a loan uses in reverse, and it holds at every provider.
The regular saver calculator prints the month-by-month table: the balance each month, the interest that month earned, and the total — built so the rows sum to the printed total exactly. Set the monthly amount and rate your account really has and compare its statement against the table. If the shapes match and the pennies are close, the account is doing what it said; providers differ slightly on which day money starts earning, which moves the result by pence, not pounds.
This is educational guidance on how UK pay and tax work. It does not decide payroll correctness, HMRC treatment, lender approval, benefit entitlement or employment rights, and it is not regulated financial advice. Where a figure matters, check it against your payslip, your HMRC account, or the official guidance linked above.
The rate is genuinely paid on money in the account, and for money you can only save monthly, a higher rate on the drip beats a lower one. What the arithmetic changes is comparisons: judge accounts on what your actual pattern of deposits earns — which the calculator works out — rather than on headline against headline.
It can be, once your total interest for the year outgrows your allowances — though most people's does not. The tax-on-savings-interest page explains the order the allowances apply in.
Last updated 2026-08-28. Checked by Sean Elsmore. Rates last checked against GOV.UK on 2026-08-07. Estimates are for planning and should be checked against official records where the decision matters.