Compound Interest Calculator
Free compound interest calculator with monthly contributions, inflation adjustment, and tax-on-interest modelling for Gibraltar savings and fixed-term deposit accounts.
Future value
GB£40,071
Growth over time
| year | Deposits | Interest | Balance |
|---|---|---|---|
| 1 | GB£2,400 | GB£281 | GB£12,681 |
| 2 | GB£2,400 | GB£348 | GB£15,429 |
| 3 | GB£2,400 | GB£418 | GB£18,247 |
| 4 | GB£2,400 | GB£489 | GB£21,136 |
| 5 | GB£2,400 | GB£562 | GB£24,098 |
| 6 | GB£2,400 | GB£637 | GB£27,135 |
| 7 | GB£2,400 | GB£714 | GB£30,249 |
| 8 | GB£2,400 | GB£793 | GB£33,442 |
| 9 | GB£2,400 | GB£873 | GB£36,715 |
| 10 | GB£2,400 | GB£956 | GB£40,071 |
For estimation purposes only. Actual returns and tax treatment depend on your bank and personal circumstances — consult a financial adviser.
How Compound Interest Works
Compound interest means you earn interest not just on the money you originally put in, but also on all the interest already added to your balance. Each time interest is credited — monthly, in this calculator's default setting — it becomes part of your balance and starts earning interest itself in the next period. That is why growth is slow in the first year or two but noticeably accelerates after a decade or more.
Take an initial deposit of £10,000 in a Gibraltar savings account paying 2.5% a year, with interest compounded monthly, plus a further £200 paid in every month. In the early months, the interest earned is small compared with the amount you are contributing. After several years, however, the balance already contains several rounds of interest-on-interest stacked on top of your monthly contributions, and the pace of growth increases year on year because the base on which interest is calculated keeps growing. The compounding frequency you select here (monthly, annually, and so on) determines how often already-credited interest itself starts earning interest — the more frequent the compounding, the more the effective annual rate exceeds the nominal rate quoted by your bank.
How Interest on Savings Is Taxed in Gibraltar
Gibraltar runs its own tax system under the Income Tax Act 2010, entirely separate from the United Kingdom's — Gibraltar is a British Overseas Territory with its own Income Tax Office (gibraltar.gov.gi/income-tax-office) and its own tax legislation, not a UK tax jurisdiction. This matters for savers because Gibraltar's treatment of interest is materially different from many nearby jurisdictions.
According to the Income Tax Office's own published guidance, interest is not chargeable to tax under the Income Tax Act 2010 unless it falls into specific categories — principally interest earned in the course of a licensed money-lending or deposit-taking business, or intercompany loan interest exceeding £100,000 a year (subject to anti-avoidance rules). Gibraltar-based law firms such as Hassans confirm the same position: ordinary bank interest earned by resident individuals from institutional deposits is not taxed, and there is no withholding tax deducted at source on personal savings interest. In practice, a Gibraltar resident holding a standard savings account or fixed-term deposit keeps their gross interest in full — this calculator's default 'no tax' account type reflects that ordinary position.
One genuine nuance worth knowing: this 0% treatment is the default position for ordinary residents. Individuals who hold Gibraltar's special residency statuses — Category 2 or HEPPS (High Executive Possessing Specialist Skills) — are taxed under different, bespoke rules that can capture worldwide passive income including interest, and non-Gibraltarian residents who do not hold Category 2/HEPPS status and are not in third-party employment can, in some circumstances, be taxed on the whole of their savings income. If your situation involves anything other than ordinary residency and a standard bank account, confirm your specific position with the Income Tax Office or a Gibraltar tax adviser rather than relying on the calculator default.
Savings Products Available in Gibraltar
Gibraltar retail banks offer instant access savings accounts, which typically pay a variable rate in the region of 1% to 2% a year and let you deposit or withdraw at any time — convenient for an emergency fund, but the rate moves with the bank's own pricing and general interest-rate conditions. For money you can commit for a fixed period, the Gibraltar Savings Bank (a government-backed savings institution) offers fixed-term deposit products, typically paying somewhere in the 2% to 3% a year range depending on the term you choose and prevailing rates at the time you open the account.
Because ordinary savings interest is not taxed for Gibraltar resident individuals, as explained above, the gross rate quoted by the bank is generally also the rate you actually receive — there's no tax deducted from the interest itself for either product, a genuine point of difference from many neighbouring tax jurisdictions where deposit interest is taxed at source.
Example: £10,000 Plus £200 a Month for 10 Years at 2.5%
With an initial deposit of £10,000, monthly contributions of £200, a nominal interest rate of 2.5% a year and monthly compounding, this calculator projects a future value of £40,071 after 10 years. Of that total, £34,000 comes from your own money — the original £10,000 deposit plus £24,000 paid in over the ten years — and £6,071 is interest earned. Because interest compounds monthly, the effective annual rate works out at 2.53%, slightly above the 2.5% nominal rate quoted. At this rate, a lump sum left untouched with no further contributions would take around 27.8 years to double.
Example: The Same £10,000 Without Monthly Contributions
Deposit the same £10,000 at 2.5% with monthly compounding, but skip the monthly top-ups, and the balance grows to £12,837 after 10 years. Set against the £40,071 in the example above, the gap shows how much of the larger total comes specifically from the habit of contributing £200 every month, rather than from the initial deposit alone — regular contributions make a substantial difference over the same period and rate.
Gibraltar's Income Tax Office confirms that ordinary bank and savings interest earned by resident individuals is not chargeable to tax under the Income Tax Act 2010 — a genuinely different position from the UK's personal savings allowance model, despite Gibraltar's British Overseas Territory status. Special residency regimes such as Category 2 and HEPPS status are taxed differently and fall outside this default treatment.
