UK workers are advised to take immediate action regarding a potential tax bill of £641 on their savings interest following new HMRC data indicating a significant increase in those affected.
Workers in the UK are facing unexpected letters from HM Revenue and Customs (HMRC) regarding a significant tax bill that many may not have anticipated. According to recent data released by HMRC, over 1.4 million basic rate taxpayers could be liable for an average tax of £641 on their savings interest. This situation has prompted Paragon Bank to advise savers on the importance of maximizing their cash Individual Savings Accounts (ISAs) to mitigate unnecessary tax burdens.
The data shows a stark rise in the number of people taxed on their savings in just three years, with the total number of affected individuals nearly doubling from 1.27 million in the 2022/23 tax year to an anticipated 2.79 million by 2025/26. Basic rate taxpayers are particularly impacted, with their potential tax liability swelling from 613,000 in 2022/23 to approximately 1.42 million in 2025/26, representing a dramatic 132% increase. These statistics indicate a growing trend where more individuals are pulled into tax liabilities that they previously avoided, highlighting the need for awareness among taxpayers.
As workers are urged to act swiftly to manage this new risk, financial institutions like Paragon Bank are emphasizing the necessity of financial planning and the strategic use of ISAs. The information revealed by the bank, supported by a Freedom of Information request, underlines the changing landscape of savings taxation and serves as a reminder for taxpayers to reassess their financial strategies, ensuring they do not fall prey to unnecessary tax obligations as the tax system continues to evolve in response to current economic conditions.
