More than two million people aged 65 and over are set to pay tax on their savings income in the 2026/27 tax year, new analysis from Paragon Bank has revealed.
A Freedom of Information request by the bank to HM Revenue & Customs shows 2.1 million people in this age group are expected to face an income tax liability on their savings income, more than four times the 517,000 recorded in 2022/23.
According to Paragon, the total tax liability on savings income among over-65s is expected to reach £3.34 billion in 2026/27, compared with £795 million four years ago.
Those aged 65 and over are expected to account for almost half (47%) of all taxpayers with an income tax liability in 2026/27, up from 42% in 2022/23.
Andrew Wright, head of savings at Paragon Bank, said: “Millions of older savers are being pulled into the tax net, putting more of their retirement savings at risk, with four times as many savers aged 65 plus incurring a tax bill on their interest than just four years ago.
“With savings often providing vital financial security later in life, it is important to regularly review where your money is held. Making full use of your ISA allowance can help protect more of your hard-earned interest from tax and those aged 65 plus have the benefit of retaining the full £20,000 cash ISA allowance from next tax year.”
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