Compound Interest Calculator UK
Calculate the future value of your savings and investments. Factor in monthly contributions, interest rates, and compounding frequency to see your money grow.
Investment & Savings Details
Enter your initial deposit, interest rate, and monthly contributions to project your growth
The initial amount of money you are investing or saving.
The expected annual return or interest rate (AER).
How many years you plan to leave the money invested.
How often the interest is added to your balance.
An additional amount added every month (optional).
Future Value Results
Projected growth of your savings and investments
Enter your investment details above, then click Calculate Growth to see the power of compound interest.
UK Savings & Investment Benchmarks
Understanding UK tax allowances and savings rules helps you maximise your returns and keep more of your hard-earned interest.
| Metric | Value / Limit | Context / Details |
|---|---|---|
| ISA Annual Allowance | £20,000 | Total tax-free savings and investment limit per tax year. |
| Personal Savings Allowance | £1,000 / £500 | Basic rate taxpayers get £1,000; higher rate taxpayers get £500 tax-free. |
| Rule of 72 | 72 ÷ Rate | Quick formula to estimate how many years it takes to double your money. |
| NS&I Premium Bonds | £25 – £140,000 | Prize-based savings where ‘interest’ is paid as tax-free cash prizes. |
| Fixed Rate Bonds | 1 – 5 years | Lock your money away for a guaranteed, often higher, interest rate. |
Compound Interest FAQ
Everything you need to know about how compound interest works, UK tax rules, and maximising your savings growth.
Compound interest is the process where your money earns interest not only on the initial amount you deposited (the principal) but also on the interest that has already been added to your account. This creates a ‘snowball effect’, causing your savings to grow exponentially over time rather than just linearly.
Simple interest is calculated only on the original principal amount. Compound interest is calculated on the principal plus any accumulated interest. For example, £1,000 at 5% simple interest earns £50 every year. At 5% compound interest, the second year earns interest on £1,050, resulting in £52.50, and so on.
Yes, but most people have a Personal Savings Allowance (PSA). Basic rate taxpayers can earn up to £1,000 in savings interest tax-free per year, while higher rate taxpayers can earn up to £500. Additional rate taxpayers get no PSA. However, all interest earned inside an ISA is completely tax-free.
It varies by account. Many UK savings accounts compound interest annually (on the anniversary of opening the account) or monthly. Fixed-rate bonds often pay interest annually or at maturity. The more frequently interest is compounded, the faster your money will grow, which is reflected in the account’s AER (Annual Equivalent Rate).
The Rule of 72 is a quick mental shortcut to estimate how long it will take for an investment to double in value. You simply divide the number 72 by your annual interest rate. For example, at a 6% return, it will take approximately 12 years (72 / 6 = 12) for your money to double.