Need to Know: Call for UK savers to utilise cash ISAs before deadline
- Millions of UK savers are being urged to act before April 5, 2026, to avoid hefty tax bills on their savings interest by maximising their cash ISA allowances.
- New HMRC data reveals that over 1.4 million basic rate taxpayers will face an average tax bill of £641 on their savings interest in 2025/26. The number of people taxed on their savings has more than doubled in just three years, rising from 1.27 million in 2022/23 to 2.79 million in 2025/26.
- Basic rate taxpayers are particularly affected, with numbers surging by 132% from 613,000 to 1.42 million over the same period. Higher-rate taxpayers paying savings tax have also increased dramatically, from 387,000 to 883,000, with average bills of £2,030.
- Andrew Wright, Paragon Bank head of savings, warned: “More people than ever are being drawn into paying tax on their savings and a letter from HMRC risks catching many by surprise.”
- Cash ISAs allow savers to earn interest completely tax-free, with current annual limits of £20,000. However, from 2027, the rules change with only £12,000 permitted in cash ISAs, making immediate action crucial.
- Pensioners are particularly hard hit, with over-65s forecast to pay £2.5 billion in savings tax in 2025/26 – a 215% increase on 2022/23. Wright added that frozen tax thresholds are “pulling more people into a part of the tax system originally designed for wealthier individuals.”
READ THE FULL STORY: Letter from HMRC ‘could catch many by surprise’ with £641 bill
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