Nearly 1.2 million one-year fixed-term adult savings accounts due to mature between June and the end of the year could generate enough interest to incur a tax payment, Paragon Bank analysis has revealed.
Paragon’s analysis of CACI data shows that there are 1.17 million one-year fixed-term adult non-ISA accounts maturing during the period that will generate interest of more than £500.
This would breach the Personal Savings Allowance (PSA) of £500 for higher-rate taxpayers and incur an income tax payment.
Of those accounts, 822,000 will generate more than £1,000 in interest, resulting in a tax liability for basic-rate taxpayers.
In total, 1.7 million one year fixed-term adult non-ISA savings accounts are due to mature between June and the end of December, with a value of £70.5 billion, meaning that seven in 10 accounts will generate enough interest to potentially incur a tax payment.
Under PSA, basic rate taxpayers can earn up to £1,000 in savings interest across all accounts held before they incur tax, with higher rate taxpayers able to earn up to £500. Additional rate taxpayers don’t benefit from a PSA.
Paragon Bank Head of Savings, Andrew Wright, said: “Fixed-rate savings dominated the market during 2023 and 2024, with many accounts benefitting from high savings rates. Many savers will have had a great return on their savings but could ultimately breach their personal tax allowance as a result.”
He added: “Many of those one-year accounts are now maturing over the next six months and nearly 1.2 million people could potentially receive a tax bill. Therefore, I urge savers review their accounts and make the most of their tax-free allowance by utilising other savings products, including cash ISAs.”
