The number of savers expected to pay £5,000 or more in income tax on their savings interest has risen to 144,000 people, a Freedom of Information request by Paragon Bank has found. It said the FoI revealed that HMRC was forecasting this number of people would pay a minimum of £5,000 in the current tax year, a 173% increase in four years.
The figures show that 52,700 people had a tax liability of more than £5,000 on savings income in the 2022-23 tax year. That more than doubled to 117,000 in 2023-24, before rising again to 133,000 in 2024-25 and 137,000 in 2025-26, with 144,000 predicted for 2026-27.
Growing Issue
Furthermore, according to CACI data, there are 1.1 million Instant Access adult non-ISA savings accounts holding balances of £100,000 or more, with a combined value of over £260.7 billion. Some of these balances are likely to be generating hundreds, if not thousands, of pounds in tax, as they sit outside a tax-free wrapper such as an ISA, Paragon said.
Savers have an annual tax-free ISA allowance, currently £20,000. The data highlighted how tax was becoming a growing issue for savers with larger balances, particularly at a time when many people are holding substantial sums in cash and looking to make the most of competitive rates.
Substantial Bills
Andrew Wright, head of savings at Paragon Bank, said: “These figures show that tax on savings is no longer an issue affecting just a small number of people. As balances have grown and rates have remained relatively high, far more savers are now finding themselves with substantial tax bills on their interest.
“With CACI data showing 1.1 million non-ISA savings accounts hold more than £100,000, it is clear there are a lot of people with larger balances who may need to think carefully about how their money is structured. Reviewing your savings regularly, checking the rate you are earning, and making use of tax-efficient options where appropriate can help ensure more of your return stays in your pocket.”
