Additional rate taxpayers in the UK are expected to pay an average of £6,540 in tax on their savings income during the 2026-27 financial year, according to new figures obtained by Paragon Bank through a Freedom of Information request to HM Revenue and Customs (HMRC).
This represents a £2,830 increase, or 76%, compared with the average bill of £3,710 recorded in 2022-23. The data suggests that the tax paid on savings interest by the UK's highest earners has almost doubled in just four years.
Changes for other taxpayer groups
Basic rate taxpayers are forecast to pay an average of £620 in tax on their savings income during 2026-27, up from £580 four years earlier. This represents an increase of just 7%.
Meanwhile, higher rate taxpayers are expected to pay an average of £1,710, slightly below the £1,740 recorded in 2022-23.
Impact of rising rates and fiscal drag
The impact of rising savings interest rates alongside fiscal drag occurs when tax thresholds remain unchanged while incomes increase. As more people are pushed into higher tax brackets, some savers find their tax-free allowances reduced or removed altogether.
Andrew Wright, Head of Savings at Paragon Bank, said the improved returns available on savings accounts had brought an unexpected downside for some customers.
He 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.
"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."
Personal Savings Allowance explained
The Personal Savings Allowance determines how much interest people can earn from savings before paying Income Tax. Basic rate taxpayers can receive up to £1,000 in savings interest tax-free each year, while higher rate taxpayers have an allowance of £500. Additional rate taxpayers do not receive a Personal Savings Allowance, meaning interest earned outside tax-free accounts may be subject to tax from the outset.
Mr Wright encouraged savers to keep track of the interest earned across their accounts and consider using their annual Individual Savings Account (ISA) allowance.
He added: "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 for 2026-27 are forecasts rather than confirmed final tax liabilities, and were supplied following Paragon Bank's request to HMRC.
