The number of people paying tax on their savings income is set to soar by 269% in just four years, according to new analysis from Spring.
A Freedom of Information request to HM Revenue & Customs shows that 4.51 million people are expected to face an income tax liability on their savings income in 2026/27, up from 1.22 million in 2022/23.
Spring said the number of basic-rate taxpayers affected is forecast to more than quadruple, rising 332% from 475,000 to 2.05 million. Savers in this band are expected to pay an average of £804.
Nearly four times as many higher-rate taxpayers will also pay tax on their savings income, with the number jumping 275% from 405,000 to 1.52 million, paying an average of £1,684.
Meanwhile, the number of additional-rate taxpayers is expected to more than double, rising from 301,000 to 682,000, with this cohort paying an average of £5,821.
While additional-rate taxpayers will account for just 15% of those paying tax on savings income in 2026/27, the data shows they are forecast to shoulder almost half of the total bill, contributing £3.97 billion, or 49%.
Derek Sprawling, head of money at Spring, said: “Higher rates have helped savers generate better returns on their savings, but they have also pushed millions beyond their tax-free Personal Savings Allowance.
“With the allowance frozen, more people are being dragged deeper into the tax net, including more than two million basic-rate taxpayers. As well as making use of tax-free options such as ISAs, some of the additional tax burden could be offset by making the most of all surplus cash. Any balances in current accounts not earning interest could boost interest earned overall, even after the tax take.”
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