Why 4.5m people are set to pay tax on savings this year - and how they can avoid it

Millions of savers are facing a tax bill on their interest this year as higher rates collide with frozen income tax thresholds.

New HMRC figures obtained under the Freedom of Information (FOI) Act show 4.51 million people are forecast to owe income tax on savings income in 2026/27 – almost four times the 1.22 million recorded in 2022/23.

Pensioners are amongst those particularly exposed, with 2.1 million people aged 65 and over expected to pay tax on their savings.

Here, we explain why the number has risen so sharply, who is most affected and what you can do to reduce your bill.

How many people are due to pay tax on their savings?