Compound Interest Calculator
Project the future value of a UK savings account, ISA, or general investment account using compound interest. Set a starting amount, an interest or growth rate, and optional monthly contributions to see the snowball effect over time — and how much of your end balance is contributions versus growth.
How is this calculated?
For a lump sum: FV = P × (1 + r/n)^(n×t), where P is the principal, r is the annual rate, n is the number of compounding periods per year, and t is years. For monthly contributions, the future value of an ordinary annuity is added: PMT × [(1 + r/n)^(n×t) − 1] / (r/n). Returns are shown gross — within an ISA they remain tax-free, while in a general investment account interest is taxed under your Personal Savings Allowance and dividends under the dividend allowance.
Frequently Asked Questions
What is compound interest?
Compound interest is interest earned on both your original deposit and on the interest already credited. Each period the base on which interest is calculated grows, producing exponential rather than linear growth. Time is the largest single lever — doubling the duration usually does more for the end balance than doubling the rate.
Are returns inside an ISA really tax-free?
Yes. Interest, dividends, and capital gains earned inside a Cash ISA or Stocks & Shares ISA are exempt from UK income tax and capital gains tax. The annual subscription limit is £20,000 across all adult ISAs combined. Outside an ISA, the Personal Savings Allowance shields the first £1,000 of interest for basic-rate taxpayers.
Monthly versus annual compounding — does it matter?
Yes, but less than people think. A nominal 5% rate compounded monthly produces an effective annual rate of about 5.116%. Over 30 years on £10,000 that gap adds up to roughly £600. Most UK savings products quote AER, which already normalises for compounding frequency so you can compare like-for-like.
How much will £10,000 grow to in 20 years?
At 5% annual growth compounded monthly, £10,000 reaches about £27,126 over 20 years. At 7% — closer to the long-run global equity return — it reaches £40,387. Adding £200 a month to the 7% scenario lifts the end balance past £140,000.
Last updated: May 2026 · Rates sourced from HMRC