Whether a cash ISA beats an ordinary account depends on your allowance, not just the rates. The after-tax comparison, with the breakeven both ways.
A higher gross rate does not settle it. On £60,000 of income, £40,000 in an ordinary account at 4.6% earns £1,840 but keeps £1,304 after £536 of tax — while a cash ISA at 4.1% keeps all £1,640. The ISA wins by £336 a year despite the lower rate. The calculator below runs your own balance, income and rates, and reports the breakeven both ways: the ordinary rate that would match the ISA, and the balance at which the ordinary account stops winning. Every rate on this page is an example to overwrite.
Enter both rates as the accounts actually pay them — the figures here are examples, not recommendations — and your income, which sets your allowance.
While your interest fits inside your allowances, the higher gross rate simply wins. Once tax starts, the ISA's shelter can beat a better gross rate — which is why the answer depends on your income and balance, not on the rates alone.
At these rates and this income, the ordinary account wins up to a balance of £14,925.27 and the ISA wins beyond it.
Both rates are yours to set, not market rates. A planning estimate, not financial advice.
| 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. |
| 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. |
|---|
While the year's interest fits inside your allowances, tax never enters it: the account with the higher gross rate simply pays more, and an ISA's shelter is worth nothing that year. The moment interest outgrows the allowances, every extra pound in the ordinary account is taxed at your rate while the ISA's pound is untouched — and the comparison can flip without either rate moving. That is why this calculator asks for your income and balance rather than just two rates, and why the breakeven balance it reports is personal to you.
The first breakeven answers "how much better would the ordinary rate need to be?" — at the example figures, an ordinary account must pay 6% to net what the ISA nets at 4.1%. The second answers "at what balance does the winner change?" — at these rates, the ordinary account wins below £14,925.27 and the ISA wins above it. Both are found by running the full allowance stacking at each point, not a flat tax-rate shortcut, so the starting rate for savings and the higher-rate cliff are inside the answer.
It compares one year's interest after tax, and nothing else. It does not model the ISA allowance ceiling on new deposits in a year, transfers between providers, fixed-term access restrictions, or rates changing mid-year — and it never suggests which provider or account to open. Whether to use an ISA also has a longer horizon than one year: money already inside a wrapper stays sheltered in future years when your balance, income or the rules may differ. The savings hub covers the allowances this page leans on.
Change any figure above and the result moves with it. A payslip can differ from any calculator because payroll works pay period by pay period, so a tax-code change, a bonus, arrears or a refund can land in one month and not the next. See how each deduction is worked out.
Not pointless, just not winning this year. If the ordinary rate is higher and your allowances cover the interest, the ordinary account pays more now. The wrapper's value is the future: balances grow, allowances halve at the higher-rate threshold, and money already inside an ISA stays sheltered without using a later year's deposit allowance.
Because tax sits between them, and tax depends on you. The same pair of rates flips winner between a basic-rate taxpayer with a small balance and a higher-rate taxpayer with a large one. The full stacking — unused Personal Allowance, starting rate, Personal Savings Allowance, then your rate — is what actually decides it.
No. It compares cash interest with cash interest. A stocks and shares ISA holds investments whose returns are not an interest rate, and comparing those with a savings account is a different question this page does not answer.
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.