Savers have been urged to act as a major tax deadline looms. The cut-off to register for HM Revenue and Customs’ (HMRC) Self Assessment is Sunday, October 5, and missing it can trigger fines and delay tax refunds or reliefs, if this applies.
Due to higher savings account interest rates and frozen tax-free allowances, more savers may find they need to submit a tax return this year. Kevin Mounford, co-founder of savings marketplace Raisin UK, said: “The October 5 registration deadline is a crucial date for anyone who needs to submit a self-assessment return. Missing it can mean automatic penalties from HMRC, with further fines of £100 or more if your return is late.
He added: “What’s different now is that higher savings rates have completely changed the picture. You no longer need a six-figure nest egg to breach your allowance.”
The Personal Savings Allowance (PSA) allows basic-rate taxpayers to earn up to £1,000 in savings interest tax-free each year. Higher-rate taxpayers get just £500, while additional-rate taxpayers get no allowance at all.
When interest rates were near zero, these thresholds seemed generous. Before the Bank of England began raising rates in 2021, a basic-rate taxpayer could hold over £150,000 in the best easy-access account without paying tax.
Today, with top accounts paying around 5%, just £19,600 in savings will use up the allowance. For higher-rate taxpayers, as little as £9,800 is needed.
As a result, millions more people are set to pay tax on their savings this year. A Freedom of Information request obtained by AJ Bell showed 2.64 million people are expected to pay savings tax in 2025/26, up from only 647,000 in 2021/22.
The Treasury is set to collect more than £6billion from savings interest this year, marking a fourfold jump in just five years.
Mr Mountford said: “Many people simply will not realise they need to register until HMRC comes knocking. That can lead to nasty surprises like a reduced pay packet or pension payment when your tax code is adjusted.
“By registering before October 5, you give yourself time to get organised, claim any reliefs and avoid unnecessary financial setbacks.
“This is no longer just an issue for wealthy savers – everyday households are now at risk of handing over part of their hard-earned savings to the taxman. Making use of ISAs and reviewing where your money is held is more important than ever.”
People can check how to register for Self Assessment via the HMRC website.
