UK Simple Interest Calculator

Simple interest is the most straightforward way interest can be calculated: a fixed percentage of the original amount, applied evenly over time, with no compounding. This calculator works out the interest earned or charged, the total amount at the end of the term, and a year-by-year breakdown, for any principal, rate and time period.

How to use the simple interest calculator

Enter the principal amount, the annual interest rate, and the time period, choosing whether to enter that period in years, months or days. The calculator instantly shows the total interest earned or payable and the total amount at the end of the term, along with a year-by-year breakdown so you can see how the interest builds up in a straight line rather than compounding.

How the calculation works

Simple interest uses the formula I = P × r × t, where P is the principal, r is the annual interest rate as a decimal, and t is the time in years. The total amount at the end of the term is simply the principal plus this interest. Because the interest is always calculated on the original principal rather than a growing balance, the interest earned each year stays exactly the same for as long as the rate does not change.

This is the key difference from compound interest, where interest is added back into the balance and then itself earns interest in following periods, causing growth to accelerate over time. Simple interest grows at a constant, predictable rate instead, which makes it easier to forecast but generally means slower growth over long periods compared with compounding at the same headline rate.

Worked example

Say you have £5,000 in an account paying 4% simple interest a year, and you leave it for 3 years. Using I = P × r × t, that is £5,000 × 0.04 × 3 = £600 in interest, giving a total amount of £5,600 at the end of the 3 years. Notice that the interest earned is exactly £200 in each of the 3 years, since simple interest does not compound, unlike a compound interest account where the annual amount would grow slightly each year as previous interest starts earning interest of its own.

Common mistakes to avoid

A common mistake is assuming an interest rate quoted by a bank or lender is simple interest by default, when in fact most UK savings accounts, mortgages and many loans actually compound, usually daily, monthly or annually. Always check the specific product terms rather than assuming, since the difference becomes significant over longer periods or higher rates.

Another mistake is mixing up the time period units, for example entering “3” intending 3 months but the calculator (or a manual calculation) treating it as 3 years. Double-check which unit you have selected, particularly for shorter-term deposits or loans where the difference between months and years has a large effect on the result.

It is also worth remembering that simple interest calculations here do not account for tax. Interest earned outside a tax-free wrapper, such as an ISA, may be taxable depending on your total savings income and personal savings allowance for the year.

Related calculators

To see how the same principal grows with interest compounding over time instead, try our compound interest calculator. If you are saving towards a specific target, our savings goal calculator works out how much you would need to set aside each month, and our ISA calculator can help you plan tax-free saving. If you are looking at borrowing rather than saving, our loan repayment calculator covers standard compounding personal loans. For more on how compounding works over the long run, see our guide to compound interest explained.