Additional rate taxpayers are forecast to face an average Income Tax liability of £6,540 on their savings in 2026-27, compared with £3,710 in 2022-23, according to data obtained by Paragon Bank through a Freedom of Information request to HMRC.
This represents an increase of £2,830, or 76%, over four years, the bank said. The rise is considerably higher than among other taxpayer groups.
Basic and higher rate taxpayers
Basic rate taxpayers are expected to pay an average of £620 in 2026-27, compared with £580 in 2022-23, an increase of 7%. Meanwhile, the average liability for higher rate taxpayers is forecast to be £1,710 this tax year, broadly in line with the £1,740 recorded in 2022-23, Paragon said.
The bank added that "the figures highlight the growing tax implications for savers with larger balances held outside tax-free accounts, particularly as fiscal drag is bringing more people into higher tax brackets, reducing their Personal Savings Allowance or resulting in no allowance at all".
Impact on savers
Andrew Wright, head of savings at Paragon Bank, said: "Better savings rates have been good news for savers, but they can also come with a higher tax bill. Additional rate taxpayers are now expected to pay more than £6,500 on average in tax on their savings interest, almost double the amount four years ago."
He added: "Unlike basic and higher rate taxpayers, additional rate taxpayers do not receive a Personal Savings Allowance, so tax may be due from the first pound of interest they earn. Checking the total interest earned across all your accounts and making use of your ISA allowance can help you understand your position and protect more of your returns from tax."
The figures were obtained through a Freedom of Information request submitted by Paragon Bank to HMRC. The bank said the figures for 2025/26 and 2026/27 were forecasts.
