Many more Brits could face tax bills on their savings, which may be avoidable, according to a report. As many as 5.2 million non-ISA savings accounts are now earning enough interest to breach the £1,000 personal savings allowance (PSA) for basic-rate taxpayers, according to research by Paragon Bank. Once interest exceeds that threshold, it becomes taxable.

Those 5.2 million accounts hold a combined £516billion. For higher-rate taxpayers, who have a lower PSA of £500, the numbers rise to nine million accounts holding £632.7billion. Savers can shield interest from tax by using Cash ISAs (Individual Savings Accounts), which currently allow up to £20,000 a year in tax-free savings. However, there are rumours that this allowance will be cut in Rachel Reeves' budget this year.

Rachel Ree

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