Emergency fund calculator 2026/27
How many months of essential spending your fund covers — and, because months are not the whole question, what running out would cost you and what holding the money costs you in tax.
Calculator
Your fund, and what a month costs
Cash you could reach within a few days without a penalty. Money in an investment account is not this, and neither is a credit limit.
Rent or mortgage, bills, food, transport, insurance, minimum debt payments — what you would still be paying with no income at all. Not your usual monthly outgoings, which include things you would stop.
There is no correct answer to this and the page does not supply one. What moves it: how long your notice period is, whether one income or two would stop, whether anyone depends on you, whether your work is a salary or a series of contracts, and how quickly you could realistically be earning again.
Salary, self-employed profit, rent, pension in payment. It decides how much of the interest on this fund is taxed, because the personal savings allowance depends on which band you end up in.
The three rates that decide what it costs
The AER your account quotes. One year of simple interest is worked out from it — nothing is compounded here, because an AER already carries the within-year compounding.
The rate on the credit you would actually reach for if the fund ran out — a credit card, an overdraft, a loan. This is what the fund is buying you out of, and it is usually several times the rate the fund itself earns.
Income tax is devolved and the Scottish bands differ — but savings interest is taxed on the UK-wide bands wherever you live, so the region changes this answer only through the band your earnings put you in.
Which set of rates, thresholds and allowances to apply.
This works out a runway, not a recommendation. It divides what you have by what a month costs, prices what running out would cost you, and prices the tax on holding the money where you are holding it. It does not tell you how many months to keep or where to keep them.
Nothing you type is transmitted or stored: this page is a static file and the arithmetic runs in this tab. A share link is the exception — it carries your figures in the URL. What that means.
Your runway, what running out would cost, and what holding it costs
What you have set aside, divided by what a month of essentials costs
3.3 months
£6,000.00 of fund, at £1,800.00 of essential spending a month.
The 6 months you asked for would take £10,800.00, so you are £4,800.00 short of your own target.
The same fund against four different targets
| Months covered | Fund needed | Still to save | A year’s interest on it | Tax on that interest |
|---|---|---|---|---|
| 3 months | £5,400.00 | £0.00 | £243.00 | £0.00 |
| 6 months | £10,800.00 | £4,800.00 | £486.00 | £0.00 |
| 9 months | £16,200.00 | £10,200.00 | £729.00 | £45.80 |
| 12 months | £21,600.00 | £15,600.00 | £972.00 | £134.80 |
None of these rows is the right answer, and the page will not pick one. What decides it is not arithmetic: how long your notice period is, whether one income would stop or two, whether anybody depends on you, whether the work is a salary or a series of contracts, whether there would be redundancy pay or a benefit entitlement behind you, and how long your field usually takes to hire. A calculator that multiplies by six has assumed all seven.
What running out would cost
The fund is not there to earn anything. It is there to stop two specific things happening, and both of them can be priced.
| Shortfall against your own target | £4,800.00 |
|---|---|
| A year of interest on it at 24.90% APR | £1,195.20 |
| Gain realised by selling investments to cover it instead | £1,440.00 |
| Capital gains annual exempt amount that would use | £1,440.00 |
| Capital gains tax on the sale | £0.00 |
The borrowing figure is one year of interest, not a repayment schedule. It is what the balance costs to carry for twelve months at the rate you entered, which is the comparison that matters against a year of interest on the fund. Paying it down faster costs less and paying only the minimum costs more, and neither is modelled here.
The tax on a forced sale is the small half of the problem, and the half that can be counted. The larger half is that the sale happens when the emergency happens, which is not a moment you chose and is often a moment markets have already fallen. This page has no market model and does not pretend to one — that absence is the point of holding cash rather than an argument this calculator can make for you. What it can say is that the sale is a disposal, the disposal has a tax bill, and the bill lands whatever the price did.
One annual exempt amount is deducted, once. It is annual rather than per disposal, so this assumes you have made no other gains in the same tax year; if you have, the figure above is too low. The capital gains tax calculator takes the exemption as an input for that reason.
What holding it costs
A cash ISA and an ordinary savings account can pay the same rate and not be worth the same, because interest outside an ISA is taxable income and interest inside one is not. That difference is invisible until the fund gets big enough, and here is where.
| A year’s interest on £6,000.00 at 4.50% | £270.00 |
|---|---|
| Income tax it costs, outside an ISA | £0.00 |
| Left after tax | £270.00 |
| The same money in a cash ISA | £270.00 |
| Your rate after tax | 4.50% |
The allowances this income used
| Allowance | At this income | Used by this interest | Unused |
|---|---|---|---|
| Starting rate for savings | £0.00 | £0.00 | £0.00 |
| Personal savings allowance | £1,000.00 | £270.00 | £730.00 |
The unused column is not headroom, and this is the one place that matters. The personal savings allowance is worth £1,000.00 at the basic rate, £500.00 at the higher rate and £0.00 at the additional rate — and the interest itself counts towards deciding which of those you are. So receiving the interest the row appears to invite can be the thing that halves the row. The honest version of the question is measured rather than read off: another £100 of interest would cost £0.00 on top of what you already pay.
At 4.50% and your income, a fund above about £11,133.34 starts costing you income tax on its interest. That figure is found by asking the engine, not by adding published allowances together: the starting rate for savings sits underneath the personal savings allowance and shrinks pound for pound as other taxable income rises, and the allowance itself steps down with the band you land in. Adding the two headline numbers and dividing by the rate gets the wrong answer for most people in the middle. Where this matters is the ISA allowance: the same money inside a cash ISA pays no tax at any size.
Energy, at the capped rate
Energy is usually the hardest line of essential spending to remember and the easiest to underestimate. If you know roughly what you use, this prices it at the rates Ofgem caps a standard variable tariff at. It fills nothing in above.
Off a recent bill or your smart meter. Leave it at nought if you would rather not guess — nothing is estimated for you.
Gas bills often show units rather than kWh; the bill converts them for you further down.
Nothing is shown until you enter what you use. There is no typical household here to borrow: the published one is a modelled average, and putting it in the box would be showing you somebody else’s bill.
Four things this page does not know
- How many months you should hold. It is not an arithmetic question and nothing on this page answers it. What the page does is show what each answer costs and what each one buys, which is the part that is computable.
- What your essential spending actually is. The most common way this calculation goes wrong is entering normal monthly outgoings rather than the ones that would continue with no income — which overstates the fund needed, sometimes by half.
- What else you could fall back on. Statutory redundancy pay, notice pay, a partner’s income, income protection or critical illness cover, and benefit entitlements all change the answer and none of them is an input here.
- Whether the rate you entered will last. Every figure here is one year at the rate you typed. Nothing is compounded, nothing is projected forward, and no rate is assumed to persist — which is why there is no term box and no growth box anywhere on this page.
Worked example: the allowance that looked unused
Tom earns £50,000 in 2026/27 and has built up £25,000 in an ordinary savings account paying 4.00%. His essential spending is £2,100.00 a month.
- His runway is 11.9 months. That is the whole of the usual calculation, and it is the least interesting number on the page: it is £25,000 divided by £2,100.00, which he could have done himself.
- The fund earns £1,000.00 of interest in a year, and £146.00 of that goes in income tax. His personal savings allowance is £500.00 at this income and the interest uses £500.00 of it. So the 4.00% account is really paying him 3.42%. The same money in a cash ISA at the same rate would pay the full 4.00%, because nothing inside an ISA is taxed.
- The next £100 of interest would cost him £40.00. That figure is measured by asking the engine twice, and it is the honest version of a question that allowance tables answer badly. An allowance with room left in it looks like free income and is not: the personal savings allowance depends on which band the taxpayer reaches, and the interest itself counts towards deciding that, so the interest a row appears to invite can be the thing that halves the row.
- Tax on his interest started once the fund passed about £12,525.00. Below that the account and a cash ISA are the same thing at the same rate. Above it they are not, and the gap widens with every pound added — which is the fact that decides where a growing emergency fund should sit, and the one no incumbent calculator reports.
- If he were £0.00 short and covered it on a credit card at 24.90%, a year of that would cost £0.00. Selling investments to cover the same amount instead would realise £0.00 of gain and £0.00 of capital gains tax. Those two figures are what the fund is buying, and they are why the tax on the interest is a price rather than a reason not to hold it.
| Figure | Amount |
|---|---|
| Fund | £25,000.00 |
| Essential spending a month | £2,100.00 |
| A year’s interest | £1,000.00 |
| Income tax on it, outside an ISA | £146.00 |
| Interest after tax | £854.00 |
| The same interest in a cash ISA | £1,000.00 |
| Cost of another £100 of interest | £40.00 |
Methodology: runway, the tax on the interest, and where it starts
What a household spends, as a list to count against
The box above wants a month of essential spending, and the hard part is remembering everything. These are the categories the Office for National Statistics uses in the survey behind the UK’s household expenditure figures, with what an average household spent on each in 2024-25. None of this is a recommendation and none of it fills anything in.
| Category | A week | A month |
|---|---|---|
| Food & non-alcoholic drinks | £73.70 | £319.37 |
| Alcoholic drinks, tobacco & narcotics | £11.30 | £48.97 |
| Clothing & footwear | £18.00 | £78.00 |
| Housing (net), fuel & power | £118.40 | £513.07 |
| Household goods & services | £40.60 | £175.93 |
| Health | £11.90 | £51.57 |
| Transport | £96.40 | £417.73 |
| Communication | £22.40 | £97.07 |
| Recreation & culture | £82.10 | £355.77 |
| Education | £8.70 | £37.70 |
| Restaurants & hotels | £49.20 | £213.20 |
| Miscellaneous goods & services | £49.80 | £215.80 |
| Other expenditure items | £94.10 | £407.77 |
| Everything, essential or not | £676.60 | £2,931.93 |
Read the housing line carefully before you use it. Excluding mortgage interest payments, council tax and Northern Ireland rates. Mortgage interest payments can be found in category 14. So the line already includes rent and fuel, and leaves out the mortgage interest, council tax and Northern Ireland rates that footnote names. If you own with a mortgage, the largest housing cost you have is not in that figure — add your own. If you rent, it is in there, but as an average of everybody’s rather than yours.
An average household is not your household, and the total above is everything a household spends rather than what it could not stop spending. Deciding which of these continue when your income does not is the whole question, and it is yours: a mortgage and a season ticket behave completely differently when you lose a job. The figures are restated in 2024-25 prices, so they are comparable with each other and not with an old bank statement. A month is a week times 52 divided by 12, which is a little more than four weeks.
Source: Office for National Statistics licensed under the Open Government Licence v3.0. Family spending workbook 1, 2024-25, published 2026-06-10. The dataset at ONS.
The arithmetic, in full
- Runway is the fund divided by essential monthly spending. With no spending entered there is no runway, and the page shows a dash rather than the infinity the division would produce. Everything else on the page follows from that one number and the target you set beside it.
- A year of interest is the balance times the rate. Simple, over one year, with nothing compounded — an account quoting an AER already carries its within-year compounding inside the quoted rate. The same arithmetic prices the borrowing cost, at the rate you would borrow at, and the gain inside a forced sale, at the share you said would be profit.
- The tax on the interest is measured, not banded. The income tax engine is run twice — once on your income alone, once with the interest — and the difference is what the interest cost. That is the only reading that captures the personal allowance being reallocated across income types, which is why the measured cost can exceed the tax visible in the savings bands.
- The fund at which tax starts is found by asking the engine. It is not the personal savings allowance divided by the rate. The starting rate for savings — £5,000.00 at 0.00%, reduced pound for pound by non-savings taxable income — sits underneath the allowance, and the allowance itself steps down with the band you reach. The page bisects on the interest figure until it finds the first pound that costs a penny, then divides by the rate.
- Capital gains tax on a forced sale stacks the gain on your taxable income after one annual exempt amount, exactly as a real disposal would.
Rates and allowances for 2026/27
| Figure | Amount |
|---|---|
| Personal allowance | £12,570.00 |
| Starting rate band for savings | £5,000.00 at 0.00% |
| Personal savings allowance — basic / higher / additional | £1,000.00 / £500.00 / £0.00 |
| ISA subscription limit | £20,000.00 |
| Capital gains annual exempt amount | £3,000.00 |
| Capital gains rates, other assets — basic / higher | 18.00% / 24.00% |
Sources
- gov.uk — Tax on savings interest
- gov.uk — Individual Savings Accounts (ISAs)
- gov.uk — Capital gains tax rates
- gov.uk — Income Tax rates and allowances: current and past
Contains public sector information licensed under the Open Government Licence v3.0.
What has been verified, and what has not
The rates, thresholds and allowances used here were checked against gov.uk on 12 August 2026, figure by figure. That check covers the published figures only. It does not verify any result this page produces, and no named person has signed the check off yet. Treat the output as arithmetic you can follow — every figure it is made of is on the page for that reason — and not as advice about how much to hold or where to hold it.
What this calculator does not do
- It does not tell you how many months to hold. That is not an arithmetic question. It depends on a notice period, the number of incomes in a household, dependants, whether the work is salaried or contracted, redundancy and benefit entitlements, and how long the field takes to hire — none of which is an input here. Four targets are shown side by side rather than one, deliberately.
- It does not name a bank, an account or a product. The comparison is between money held inside an ISA and money held outside one, which is a difference in tax treatment rather than a difference between two providers.
- It does not model what markets do. The larger cost of a forced sale is that it happens when the emergency happens, which is frequently a moment prices have already fallen. There is no market model here and there should not be one; what is priced is the tax, because that is the part that can be counted.
- It does not project anything forward. One year of simple interest at the rate you typed, nothing compounded, no term, no assumption that any rate persists. So nothing here is a forecast and none of it is presented as one. For a balance growing over time, the savings interest calculator and the compound interest calculator are next door.
Nothing you type is transmitted or stored — there is no application server and no database. A share link is the exception: it carries your figures in the URL. What that means.
Emergency fund questions
- How much should I have in an emergency fund?
This calculator does not answer that, and it is worth being suspicious of any that does. The commonly quoted three to six months of essential spending is a rule of thumb rather than a finding, and what actually moves it is not arithmetic: how long your notice period is, whether one income would stop or two, whether anybody depends on you, whether your work is a salary or a series of contracts, what redundancy pay or benefit entitlement sits behind you, and how long your field takes to hire. What is on this page instead is the runway you already have and what each target would cost you to hold.
- What counts as essential spending?
What you would still be paying with no income at all: rent or mortgage, council tax, utilities, food, transport to interviews, insurance and minimum debt payments. It is not your usual monthly outgoings. Entering the usual figure is the most common way this calculation goes wrong, and it overstates the fund needed — sometimes by half, because subscriptions, holidays, saving and most discretionary spending stop the moment the income does.
- Should an emergency fund be in a cash ISA or a savings account?
Both hold cash and the difference is tax. Interest outside an ISA is taxable income; interest inside one is not, at any balance. Below a certain fund size the difference is nil, because the starting rate for savings and the personal savings allowance cover the interest — and above it the gap widens with every pound. This page works out where that point is at your income and your rate, which is the figure the decision actually turns on. Note the trade-off in the other direction: money put into a cash ISA uses part of the £20,000 annual subscription limit, and the limit does not carry forward.
- Do I pay tax on my emergency fund?
Never on the money itself — only on the interest it earns, as income. Three things can cover that interest before any tax is due: the personal allowance if you have income to spare, the starting rate for savings of £5,000 which shrinks pound for pound as other taxable income rises, and the personal savings allowance of £1,000, £500 or nothing depending on the band you end up in. This page measures what your interest actually costs rather than assuming any of them covers it.
- My personal savings allowance is unused — is that interest free of tax?
Not necessarily, and this is the trap. The allowance is not a fixed amount of tax-free interest; it is £1,000, £500 or nothing according to which income tax band you reach, and the interest itself counts towards deciding which of those you are. Someone whose taxable income sits just below the higher-rate threshold sees a full allowance apparently unused, receives the interest, and finds the allowance has halved — so the interest is taxed rather than free, and the extra tax falls on the earnings underneath it too. The measured cost of another £100 of interest is on this page for exactly that reason.
- Should I use my emergency fund to pay off debt instead?
This page prices the comparison rather than making it. On one side, a year of interest on the borrowing at the rate you entered; on the other, a year of interest on the fund, less the tax on it. The rates are usually several times apart, and the argument for holding the cash anyway is not about the rates — it is that a repaid credit card can be borrowed against again at that rate, while a cleared savings account cannot be un-spent. Both figures are shown so you can see the size of what you are trading.
- Why does selling investments in an emergency cost more than the fall in price?
Because the sale is a disposal, and a disposal realises whatever gain has built up in the holding. Capital gains tax falls due on that gain in the tax year of the sale, whatever the market did that week — so the cost of a forced sale is the price you got plus a tax bill, and the tax bill is the part that is easy to forget. This page prices it from the share of the sale you say would be profit. The bigger cost is that the sale happens when the emergency happens, which is often after prices have already fallen, and no calculator can price that.
- Should an emergency fund be invested?
The question this page can inform is what each option costs and what it risks. Cash loses value to inflation slowly and predictably; investments do not, but their value moves and can be well down at exactly the moment the fund is needed, which is the risk the fund exists to remove. The tax difference is priced above: an investment sold at short notice carries capital gains tax on its gain, while cash carries income tax on its interest, and inside an ISA neither applies. What follows from that is your decision rather than this page’s.
- Does a credit card or overdraft count as an emergency fund?
It is not the same thing, and the page prices the difference rather than asserting it. A credit facility is money you do not have at a cost you do not control, and the borrowing rate is typically several times what savings earn — a year of interest on a shortfall at the rate you entered is shown against a year of interest on the fund. A facility can also be withdrawn or reduced, and often is at exactly the point an income stops.