As tax on interest from savings accounts for a growing portion of Income Tax liabilities.
Over seven million people are set to pay higher-rate tax in the 2025/26 tax-year, the latest Income Tax liabilities statistics from HMRC today revealed. This marks a substantial 38.7% increase from 5.1 million higher-rate taxpayers in the 2022/23 tax-year.
Worryingly for those being dragged up the tax ladder, higher-rate taxpayers receive a smaller Personal Savings Allowance (PSA) and can earn just £500 in interest from their savings before being taxed (compared to £1,000 for basic-rate taxpayers).
While tax on savings interest accounts for just 1.9% of the £323 billion expected to be generated by Income Tax within the current tax-year, this portion has grown significantly from 0.8% in the 2022/23 tax-year, which HMRC attributes to changes in interest rates since 2021.