Overview
- Reporting this week exposed multiple cases where HMRC processing of bank data changed PAYE codes and led savers to be charged tax they did not owe, including on interest held in tax-free ISAs.
- The system traces back to a 2016 rule that requires banks to send annual savings interest data to HMRC, a feed that is now used to adjust tax codes automatically without a detailed breakdown for taxpayers.
- Investigations identified specific error types such as flawed year-on-year estimates, duplicated interest entries, people being linked to accounts they do not own, and ISA interest incorrectly treated as taxable; one case showed HMRC estimating £3,847 of untaxed interest when the true figure was £94.
- Some banks and platforms have corrected reporting mistakes — for example Zopa said it sent corrected ISA data on 7 October 2025 — but affected customers continued to receive unexpected bills, indicating delays in HMRC updating its records.
- HMRC says it will check bank-reported 2025–26 savings figures in November 2026, plans reporting reforms from 2028, and has urged taxpayers to notify it of errors while advisers, charities, and opposition politicians warn savers to review statements and expect financial strain.