A recent Freedom of Information request by Paragon Bank reveals a sharp rise in the number of savers expected to pay £5,000 or more in income tax on their savings interest. HMRC forecasts that 144,000 people will owe at least £5,000 in tax on their savings interest in the 2026-27 tax year—a 173% increase over four years.
Data shows that 52,700 savers faced this tax threshold in 2022-23, which more than doubled to 117,000 in 2023-24. The number is projected to climb steadily to 133,000 in 2024-25, 137,000 in 2025-26, and ultimately 144,000 in 2026-27.
Adding to the concern, CACI data indicates there are 1.1 million adult Instant Access savings accounts outside of ISAs with balances exceeding £100,000, collectively holding over £260.7 billion. Many of these accounts generate significant taxable interest, highlighting the growing tax burden on savers holding large cash sums beyond tax-sheltered options.
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Andrew Wright, Paragon Bank’s head of savings, commented, “Tax on savings is no longer a niche problem affecting just a few. With balances growing and interest rates staying relatively high, more savers face substantial tax bills on their interest income. Those with large balances should review how their money is structured, regularly check their interest rates, and consider tax-efficient savings options. This approach can help ensure they keep more of their hard-earned returns.”