CasviaSeparate contributions from compounded growth.
The tool compounds the initial amount at your selected frequency and models monthly contributions as an end-of-month annuity, then reports the growth above total money paid in.
Read Casvia methodology →Investing / Growth Tool
UK Compound Interest Calculator
Model how a starting amount and regular contributions can grow over time, then separate what you paid in from what compounding added.
ModelFixed-rate compounding
PrivacyRuns in your browser
Growth assumptions
£
£
%
20 years
%
Set a rate to also see the result in today's money. Leave at 0 for nominal amounts.
No sign-up · No tracking · Runs in your browser
Base case / future valueCompounding monthly
£—
Research view
Total contributions£—
Interest earned£—
With a 0% rate, your balance is simply what you pay in.
In today's money (after —% inflation a year), that is about £—.
Important: This is a mathematical projection, not a forecast. The rate you enter is assumed to remain constant; real savings and investment returns can vary, fees and tax may apply, and investment values can fall.
Growth is only as reliable as the rate assumption.
Use a rate you understand and test more than one scenario. Outside an ISA, savings interest and investment returns may be taxable.
- MoneyHelper — compound interest guidance
- GOV.UK — ISA and Personal Savings Allowance rules
How it works
Compound interest means you earn interest on your interest. Each period, the interest is added to your balance, and the next period's interest is calculated on the larger amount. The more often interest is compounded, the faster the balance grows — daily compounding grows slightly faster than monthly, and monthly faster than annual. Regular contributions add more principal on top.
Example calculation
For an initial £10,000 at 7% over 20 years:
- Compounded annually: ≈ £38,697
- Compounded monthly: ≈ £40,387
- Compounded daily: ≈ £40,547
- With £100/month added (monthly compounding): ≈ £92,480, of which £34,000 is your own money
Example is illustrative — returns vary and are not guaranteed.
Methodology & formula
For the initial lump sum, the classic compound interest formula is used:
A = P × (1 + r/f)f·t
- A = future value of the lump sum
- P = initial amount
- r = annual interest rate (as a decimal)
- f = compounding frequency (times per year)
- t = number of years
Monthly contributions are modelled as a monthly-compounded annuity (paid at the end of each month):
Contributions value = M × [ (1 + r/12)12t − 1 ] / (r/12)
where M is the monthly contribution. Future value = lump sum value + contributions value. Interest earned = future value − total paid in.
Assumptions: a constant annual interest rate with the compounding frequency you select, monthly contributions paid at the end of each month, and no fees or withdrawals. Interest is modelled before tax — outside an ISA, savings interest can be taxable. Returns are not guaranteed and real rates vary.
UK-specific information
- ISA context: inside an ISA, growth is free of UK Income Tax and Capital Gains Tax — the £20,000 annual ISA allowance applies for 2026/27. GOV.UK · 2026/27
- AER: UK savings accounts quote an Annual Equivalent Rate (AER), which reflects the effect of compounding — useful for comparing accounts with different compounding frequencies.
- Tax on interest: outside an ISA, interest is taxable. The Personal Savings Allowance is £1,000 for basic-rate and £500 for higher-rate taxpayers (2026/27). GOV.UK · 2026/27
- This calculator shows growth before tax — check how the Personal Savings Allowance applies to you.
Frequently asked questions
Why does daily compounding give a bigger result than annual?
With daily compounding, interest is added to the balance every day, so every subsequent day's interest is calculated on a slightly larger amount. Over long terms this small difference compounds into a noticeably larger balance than annual compounding.
How big is the difference between compounding frequencies?
For £10,000 at 7% over 20 years: £38,697 annually, £40,387 monthly and £40,547 daily. The gap grows with the rate, the term and the balance.
Is compound interest taxed in the UK?
Interest is taxable outside an ISA, within your Personal Savings Allowance (£1,000 basic rate, £500 higher rate for 2026/27). Inside an ISA, growth is tax-free.
What is the rule of 72?
A quick estimate: divide 72 by the annual rate to estimate how many years it takes to double. At 7%, roughly 72 ÷ 7 ≈ 10 years. It is an approximation, not an exact figure.
Does this calculator guarantee a return?
No. It shows the mathematical result of a fixed rate. Real returns — especially on investments — vary and can fall, and the value of investments can go down as well as up.
Should I add a lump sum or monthly contributions?
Both help. A lump sum grows for the whole term, so starting earlier usually beats adding more later — the key advantage of compound interest is time in the market.
Related calculators
UK Savings Calculator · ISA Calculator · Investment Return Calculator · Home
Sources
- MoneyHelper — Compound interest: moneyhelper.org.uk
- GOV.UK — ISAs: gov.uk · Personal Savings Allowance: gov.uk (2026/27)
Casvia provides educational calculators and general information. It does not provide personal financial, tax or investment advice. Rules and thresholds can change — always check the latest official guidance.