Compound Interest Calculator UK
This compound interest calculator shows how your savings grow when interest is added to your balance and then earns interest itself. For example, £5,000 plus £200 a month at 4.5% compounded monthly grows to £38,075 after 10 years, of which £9,075 is interest. It also shows the AER and what the total is worth after inflation.
- £10,000 at 4% for 10 years£14,802
- Rule of 72 at 4%doubles in about 18 years
- Savings tax-free (PSA)£1,000 basic rate
Updated November 2026 · Shows AER and inflation-adjusted value
Calculate compound interest
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The compound interest formula
For a single deposit the formula is A = P × (1 + r/n)n×t, where P is the starting amount, r the yearly rate as a decimal, n the number of times interest is added each year and t the number of years.
For example, £5,000 at 4.5% compounded yearly for 10 years is £5,000 × 1.04510 = £7,764.85. With monthly deposits the calculator repeats the sum month by month, adding each deposit as it goes.
How much will £10,000 grow with compound interest?
| Rate (AER) | 5 years | 10 years | 20 years |
|---|---|---|---|
| 3% | £11,593 | £13,439 | £18,061 |
| 4% | £12,167 | £14,802 | £21,911 |
| 5% | £12,763 | £16,289 | £26,533 |
| 6% | £13,382 | £17,908 | £32,071 |
Figures assume the interest is left in the account and no tax is paid, for example in a cash ISA.
AER, gross rate and compounding explained
- Gross rate is the yearly interest rate before tax, without taking compounding into account.
- AER (annual equivalent rate) shows what you would earn in a year if interest were compounded and left in the account. It lets you compare accounts that pay interest monthly with those that pay yearly.
- A 4.5% gross rate paid monthly is equal to an AER of 4.59%. The more often interest is added, the higher the AER.
- The rule of 72 is a quick check: divide 72 by the rate to find roughly how many years it takes to double your money. At 4% that is about 18 years.
Tax on savings interest
Most people can earn some interest tax-free through the Personal Savings Allowance: £1,000 a year for basic-rate taxpayers, £500 for higher-rate taxpayers and nothing for additional-rate taxpayers. If your other income is below £17,570 you may also get up to £5,000 of interest tax-free through the starting rate for savings. Interest in a cash or stocks and shares ISA is always tax-free.
The government has announced that savings income tax rates will rise by 2 percentage points from April 2027, to 22%, 42% and 47%.
Frequently asked questions
How do I calculate compound interest?
Multiply your balance by (1 + rate) once for each year. £1,000 at 5% for 3 years is £1,000 × 1.05 × 1.05 × 1.05 = £1,157.63.
How much is £10,000 after 10 years at 4%?
With yearly compounding and no withdrawals, £10,000 grows to £14,802.44 after 10 years at 4%.
Is monthly or yearly compounding better?
For the same gross rate, monthly compounding pays slightly more. Compare accounts using the AER, which already includes the effect of compounding.
Do I pay tax on compound interest?
Yes, interest outside an ISA counts as savings income. Basic-rate taxpayers can earn £1,000 of interest a year tax-free and higher-rate taxpayers £500.
What is a good interest rate for savings?
A good rate beats inflation after tax. With CPI at 3.5% in September 2026, a savings rate below that means your money is losing buying power.
Sources and method
We use official UK guidance and recognised formulas, and test each calculator against worked examples. Results are estimates to help you plan, not professional advice. See how we work.