Savings warning as over 100,000 Britons to be hit with over £10,000 tax bills this year

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The number of people facing five-figure savings tax bills has almost quadrupled in four years

Thousands of savers are facing tax bills of more than £10,000 on the interest earned from their savings this tax year.

An estimated 109,000 people will owe five-figure sums in 2026-27, almost four times as many as four years ago, new figures show.

In 2022-23, just 28,000 savers faced tax bills above £10,000 on their savings interest, meaning the number has surged by 289 per cent, according to Freedom of Information data obtained by Paragon Bank.

The increase comes as higher interest rates leave people with large amounts of cash outside tax-free accounts more likely to earn enough interest to face a tax bill.

The impact is being felt by a much larger group than those facing five-figure bills, with around 542,000 savers expected to owe more than £2,000 in tax on their savings income in 2026-27.

The number facing even bigger bills has also risen, with 144,000 people expected to owe more than £5,000 this tax year, compared with 52,700 four years ago.

The biggest increase came between 2022-23 and 2023-24, when the number of people owing more than £2,000 jumped from 119,000 to 363,000.

Since then, the number facing bills above this level has remained high, with more than half a million savers affected each year.

Andrew Wright, Head of Savings at Paragon Bank, said: "Hundreds of thousands of people are now facing tax bills running into thousands of pounds on their savings income.

"The number expected to owe more than £2,000 has risen more than fourfold since 2022-23, while almost four times as many people are facing bills above £10,000."

Mr Wright pointed to the role of higher interest rates in driving the trend. "Higher interest rates have delivered better returns for savers, but they also mean more people are exceeding their Personal Savings Allowance, particularly those with larger balances or income from several different accounts," he said.

Mr Wright urged savers to take a proactive approach to managing their tax exposure.

"Savers should regularly check the interest they are earning across all their accounts and understand whether it could create a tax liability," he said.

He also recommended making full use of available shelters. "Making use of ISA allowances and other tax-efficient options, where appropriate, can help people keep more of the return their money generates," Mr Wright added.

With savings tax bills likely to remain at elevated levels for the foreseeable future, understanding how interest income interacts with the Personal Savings Allowance has become increasingly important for anyone holding cash outside a tax-free wrapper.