See how your money grows over time with the power of compounding. Add monthly contributions to maximise your results.
Compound interest in the UK is most powerfully accessed through tax-free wrappers — the Stocks and Shares ISA, Cash ISA, Lifetime ISA, and SIPP pension. The 2026/27 ISA allowance is £20,000, and HMRC's ISA Manager Reference Manual on gov.uk is the authoritative rulebook for what compounds tax-free inside the wrapper.
Compound interest is the mathematical result of returns earning further returns on themselves. The formula is A = P(1 + r/n)^(nt), where P is your starting capital, r is the annual interest rate, n is the number of compounding periods per year, and t is the number of years. Add a regular contribution and you're computing the future value of an annuity: FV = P(1+r/n)^(nt) + PMT × [((1+r/n)^(nt) − 1) ÷ (r/n)]. This calculator runs both.
What separates UK compounding from US or European compounding is the ISA wrapper. Outside an ISA, dividends above the £500 dividend allowance are taxed at 8.75% / 33.75% / 39.35%, interest above the £1,000 Personal Savings Allowance is taxed at marginal rate, and capital gains above the £3,000 Annual Exempt Amount are taxed at 18% / 24% (post-October 2024 Budget rates). Inside an ISA, all three are zero. Over 30 years, that 1-2% annual tax drag compounds into a 25-40% lower terminal balance.
Realistic UK return assumptions to plug in: global equity index funds have historically returned 4-6% real (after inflation), a 60/40 balanced portfolio around 3-4% real, and Cash ISAs typically deliver near-zero real returns once CPI is accounted for. The Bank of England's CPI series and the ONS inflation pages are the authoritative reference for stripping inflation from nominal returns.
Three patterns this calculator surfaces clearly: 1. The first ten years of compounding matter more than the last ten — sequence matters far more than people expect 2. A 1% reduction in annual fees (platform + fund OCF) typically lifts a 30-year terminal balance by 20-30% 3. Using both ISA (£20k) and SIPP (£60k annual allowance) doubles your tax-protected envelope per year
For ISA rules, HMRC's ISA Manager Reference Manual and the gov.uk ISA pages are the authoritative sources.
| Year | Balance | Interest This Year | Total Contributions |
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This calculator implements the standard compound-interest formula: A = P(1 + r/n)^(nt) + PMT × [((1 + r/n)^(nt) − 1) / (r/n)]. Region-specific tax and rate defaults are sourced directly from each country's primary government source and reviewed against the publication date below.
Last verified: May 2026.