![\"Tax](\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2025\/04\/GettyImages-1319960155.jpg\")
\n\t\tThe end of the tax year is almost upon us (Picture: Getty Images)<\/p>\n
\t\t
\n\t\tThe end of the tax year is almost upon us (Picture: Getty Images)<\/p>\n
With a new financial year having started this week, a \u2018significant\u2019 number of UK savers<\/a> could find themselves with an unexpected HMRC bill<\/a> in a matter of days.<\/p>\n Although you don\u2019t have to pay tax on money you\u2019ve saved, you are taxed<\/a> on interest earned over a certain amount \u2014 and following years of rising interest rates, these thresholds are easier than ever to hit.<\/p>\n What you can expect all depends on the type of account<\/a> you have and your income tax band<\/a>.<\/p>\n But anyone with a pot of \u00a33,500 or more could soon receive a letter, so it\u2019s worth checking now to avoid a nasty surprise.<\/p>\n How much tax do you pay on bank interest? <\/p>\n Basic rate taxpayers \u2013 earning \u00a312,571 to \u00a350,270 annually \u2013 are allowed to earn \u00a31,000 a year in tax-free interest, with anything above this amount charged at 20%.<\/p>\n Meanwhile, the personal savings allowance (PSA) for those on the higher rate \u2013 with an income of \u00a350,271 to \u00a3125,140 each year \u2013 is \u00a3500, beyond which a 40% tax is incurred.<\/p>\n \t\t Then there\u2019s the different type of account: according to Money Saving Expert<\/a> (MSE), those on the basic rate would need around \u00a320,000\u00a0<\/strong>placed in a top easy-access savings account<\/strong> to exceed the allowance at current rates, with the figure for higher rate taxpayers sitting just over \u00a310,000.<\/p>\n However, if you save through a fixed-rate account<\/strong>, which locks your cash away for a set time, the threshold will be far lower.<\/p>\n Because <\/strong>you\u2019re taxed on savings interest in the tax year you can\u00a0access\u00a0it, if you opt for a fixed-rate savings account longer than a year where the interest is paid at maturity, all the interest is counted towards the final year\u2019s PSA.<\/p>\n So, higher rate taxpayers with as little as \u00a33,500 on a three-year fixed rate of 5% will go over their allowance, or roughly \u00a37,000 for anyone on the basic rate.<\/p>\n \t\t\t\tTypes of savings interest subject to tax\t\t\t<\/p>\n Your allowance applies to interest from:<\/p>\n Savings in tax-free accounts like\u00a0Individual Savings Accounts\u00a0(ISAs) and some\u00a0National Savings and Investments\u00a0accounts do not count towards your allowance.<\/p>\n Visit the UK Government website<\/a> for more information.<\/p>\n At the start of the year, Paragon Bank<\/a> revealed 2.4 million fixed term non-ISA savings accounts were set to mature in the next three months.<\/p>\n Of this figure, up to 887,000 had generated enough interest to incur a tax payment.<\/p>\n Derek Sprawling, the company<\/a>\u2019s\u00a0managing director of Savings, said that \u2018most maturing savers will, unfortunately, likely not be able to match their previous rate when it comes to an end,\u2019 and urged people to use up ISA allowances (if they haven\u2019t already) to maximise future returns.<\/p>\n When will I find out if I owe tax on my savings?<\/p>\n As the new fiscal year began on Sunday, April 6, HMRC will now begin assessing what\u2019s owed for the 2024\/25 tax period.<\/p>\n Banks notify the taxation service of the interest each customer receives, with Lloyds Bank explaining: \u2018HMRC will, in turn, complete any necessary calculations and changes.\u2019<\/p>\n If it finds you do owe tax, you\u2019ll receive a\u00a0P800 letter<\/strong>\u00a0(or\u00a0Simple Assessment<\/strong> depending on your circumstances) explaining how the money will be recouped; typically through a deduction in your personal allowance which will mean change in your tax code.<\/p>\n HMRC says these letters \u2018can be sent at any time as information becomes available\u2019, but if you want to work out whether you could be due a bill, estimates may be available through your Personal\u00a0Tax Account<\/a> on Gov.uk.<\/p>\n Alternatively, your bank or building society should provide annual statements detailing how much interest you earned, and some also include a breakdown of\u00a0what\u2019s taxable or not.<\/p>\n Do you have a story to share?<\/strong><\/p>\n Do you have a story to share?<\/strong><\/p>\n Get in touch by emailing MetroLifestyleTeam@Metro.co.uk<\/a>.<\/strong><\/p>\n Arrow Arrow![\"Young](\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2025\/04\/GettyImages-1820601093.jpg\")
\n\t\tYou\u2019re taxed on interest earned over a certain amount (Picture: Getty Images)<\/p>\n\n
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