Over 3 million saver accounts face impending taxation in the current year, with a larger number than originally projected falling within the taxation purview.

Over 3 million saver accounts face impending taxation in the current year, with a larger number than originally projected falling within the taxation purview.

In the UK, the number of savers paying tax on their savings is on the rise, with projections suggesting that over 2.64 million people could be affected by the 2025/26 financial year [1][2][3]. This significant increase is attributed to rising interest rates and the frozen Personal Savings Allowance (PSA) [2][4].

The projected figure of 2.64 million savers paying savings tax in 2025/26 represents a substantial increase from previous years. In 2022/23, the number of basic rate taxpayers paying savings tax was 494,000, a figure set to rise to 1.15 million by 2025/26 [5]. The high volume of people paying tax on savings interest has led to a warning from HMRC that letters may not be dispatched until March [6].

HMRC collects savings tax based on data it receives from banks and building societies. However, in around a fifth of cases, HMRC cannot reconcile bank account interest with taxpayer data, potentially leading to millions of pounds in savings tax slipping through the net [7].

Individual Savings Accounts (Isas) provide a tax shelter for savings, and their use is now more important than ever to protect savings from the taxman. The current best-buy rate for an easy access Isa is 5.44% from CMC Invest [8]. While Isas tend to pay slightly lower rates than other savings accounts, they offer the advantage of tax-free savings, making them an attractive option for many.

The total number of people paying savings tax in the 2025/26 financial year is estimated to be 2.52 million [1]. The average effective rate of tax on savings is about 31% [9], meaning the average person is now paying £2,300 in tax on their savings [10].

The increase in savings tax is due to rising interest rates and the PSA remaining frozen for over nine years [11]. This situation has led to a discrepancy in the figures provided, with another source stating more than 3.35 million people are projected to pay tax on savings interest this year [12]. However, the figure of 2.64 million is more consistently cited in relation to HMRC data specific to the 2025/26 tax year [1][3][4].

HMRC notifications for tax code changes are typically delivered in the form of an HMRC envelope, with a 'P800' form used to inform taxpayers of changing tax codes [13]. With the growing number of people affected by savings tax, it is crucial for savers to stay informed and make the most of tax-efficient savings options like Isas.

References:

1. The Telegraph
2. AJ Bell
3. The Guardian
4. This is Money
5. The Sun
6. The Express
7. The Times
8. Moneyfacts
9. The Mirror
10. The i News
11. The Independent
12. The Daily Mail
13. Gov.uk
14. With the growing number of savers paying tax on their savings, staying informed about tax-efficient savings options like Individual Savings Accounts (Isas) is crucial.
15. In response to the increase in savings tax, consideration of other personal-finance strategies such as investing in stocks or assessing mortgage terms might be beneficial.
16. The discrepancy in the number of people projected to pay savings tax arises due to differing sources, with some suggesting over 3.35 million people will pay tax on savings interest this year.
17. As the total number of people paying savings tax in the 2025/26 financial year is estimated to be 2.64 million, it's essential to review one's personal finance and finance strategies to optimize savings and reduce potential tax burdens.

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