New data has revealed the number of people paying tax on their savings income is set to quadruple in four years. These new findings will be of interest to anyone tax planning in Cheshire or other parts of the UK.
According to the findings by AJ Bell, 2.64 million people are set to be taxed on their savings in 2025/26, a sharp rise on the 647,000 counted in 2021/22. At the same time, the government’s Personal Savings Allowance is still frozen after nine years. That allows basic-rate taxpayers to earn up to £1,000 in savings tax-free, whilst higher-rate taxpayers are eligible for £500. The number of people in each bracket is set to rise to 1.15 million and 897,000 people respectively.
Figures show that the average Brit now pays £2,300 in tax on savings. With around £20 billion in interest on non-ISA cash accounts in 2025, this presents a windfall for the Treasury, with over £6 billion collected by the taxman. People who shifted their money to higher interest savings accounts will need to ensure they don’t breach the tax-free limit. If you file a tax-assessment form, you will need to declare any interest earned. Those who owe money may receive a P800 form, whilst salaried workers on PAYE will see it deducted from their payslips.
HMRC’s system is not foolproof and some people may be hit by short-notice periods, or letters getting sent out late in the tax year, which is why it is worth checking you are not in for an unwelcome surprise.
