More than 1.4 million basic rate taxpayers in the UK are facing an average £641 tax bill on savings interest due to rising taxation, according to new HMRC data.
Recent data from HMRC reveals a significant increase in the number of UK savers facing taxation on their savings interest, with 1.4 million basic rate taxpayers now expected to pay an average bill of £641. This marks a dramatic rise from previous years, highlighting the growing burden on personal finances as the number of individuals taxed on savings has surged from 1.27 million in 2022/23 to an anticipated 2.79 million by 2025/26.
The rise is particularly pronounced among basic rate taxpayers, whose numbers have soared by 132% from 613,000 to 1.42 million due to policy changes and economic pressures. For higher-rate taxpayers, the scenario is even more alarming, as average tax bills are projected to reach £2,030 this tax year. In comparison, additional rate taxpayers face even steeper tax burdens averaging around £6,990 on their savings interest. This trend raises concerns about the impact of taxation on savings behavior and financial planning for many families.
To mitigate these rising costs, financial experts are urging savers to consider cash ISAs, which provide a tax-free alternative for accumulating interest. Currently, individuals can deposit up to £20,000 annually into a cash ISA, making it a vital strategy for protecting their savings from the increasing tax obligations. As the deadline approaches, taxpayers are encouraged to act swiftly to take advantage of these tax benefits and shield their savings from potential additional taxation.
