# UK Savers Face Sharp Tax Increases on Interest Income Additional rate taxpayers see potential tax liabilities on savings nearly double by 2027. - **Source:** [Daily Express :: Finance Feed](https://www.express.co.uk) - **Published:** 2026-11-09 - **Topic:** [Finance](https://brifing.si/c/finance) - **Original article:** - **On Brifing:** https://brifing.si/s/80537446-f661-485a-9776-4b159a1717a5 ## Rising Tax Liabilities New data from Paragon Bank reveals a significant surge in tax liabilities for UK savers. Additional rate taxpayers are projected to face an average income tax bill of £6,540 on savings interest by the 2026-27 tax year. This marks a substantial 76% increase from the £3,710 recorded during the 2022-23 period. ## Disproportionate Impact The financial burden is not distributed equally across all taxpayer groups. While additional rate taxpayers face a 76% hike, basic rate taxpayers see a much smaller 7% increase. Meanwhile, higher rate taxpayers are expected to pay £1,710, a figure that remains broadly consistent with the £1,740 recorded four years ago in 2022-23. ## The Fiscal Drag Effect Fiscal drag is identified as a primary driver behind these rising tax implications for savers. This mechanism occurs when tax thresholds remain frozen while incomes or interest earnings rise, effectively pushing more individuals into higher tax brackets. Consequently, many savers find their Personal Savings Allowance reduced or eliminated entirely by these policies. ## Lack of Allowances A critical factor for additional rate taxpayers is the absence of a Personal Savings Allowance. Unlike other groups, these individuals may owe tax on the very first pound of interest they earn. This lack of a buffer makes them uniquely vulnerable to the cumulative effects of higher interest rates on their savings. ## Data Methodology The figures were obtained by Paragon Bank through a formal Freedom of Information request submitted to HMRC. The bank clarified that the data provided for the 2025-26 and 2026-27 tax years represent official forecasts rather than finalized accounts. These projections highlight the growing tax pressure on those holding large balances outside tax-free accounts. ## Strategic Savings Management Andrew Wright, head of savings at Paragon Bank, emphasizes the importance of proactive financial management. He suggests that savers should carefully monitor the total interest earned across all their accounts. Utilizing ISA allowances remains a primary strategy for individuals looking to protect more of their investment returns from potential tax liabilities. ## Interest Rate Context Higher savings rates have generally been positive for UK consumers seeking better returns on their cash. However, these improved rates have inadvertently led to higher tax bills for many. The current economic environment requires savers to balance the benefits of higher interest yields against the increased tax obligations that follow them. ## Future Financial Outlook As tax burdens continue to climb for top-tier earners, the necessity for tax-efficient planning becomes increasingly vital. Savers must remain vigilant regarding their total interest income to avoid unexpected HMRC bills. Understanding these evolving tax dynamics is essential for maintaining long-term financial health in an era of persistent fiscal drag and inflation. ## Sources covering this story - https://www.express.co.uk/finance/personalfinance/2264535/uk-bank-issues-personal-allowance-update-people-face-double-hmrc-bill — --- _Summary written by Brifing from the original reporting. Copyright in the original article belongs to its publisher; read the full piece at the link above._