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Why UK bank charges are not taken account when looking on interest for taxation?
When I left the UK four years ago, free banking is still an option and I'm pretty sure it still is.  Therefore, you have chosen to have a bank account with a 5.00/month charge.   In return for this charge, you will be eligible to receive certain benefits.  For example; reduced borrowing costs, discounted mortgage rates, free overdraft on small amounts, "rewards" for paying household bills by direct debit, and things of this sort.   Amongst these benefits may be preferential savings rates.  However, from HMRC's point of view it will be the extra perks you are paying for with your monthly charge.  You have chosen to pay for the account and HMRC is not interested in how you choose to spend your money, only in the money you earn. While I agree with you that it does have an element of unfairness, the problem is how would you divide the cost amongst the various benefits.