Overview

• HMRC is preparing to contact around 887,000 savers whose fixed-rate, non-ISA accounts maturing within the next three months may incur tax liabilities.
• The Personal Savings Allowance permits basic-rate taxpayers to earn up to £1,000 of interest tax-free annually, higher-rate taxpayers £500, while additional-rate taxpayers receive no allowance.
• Interest from fixed-rate accounts is taxed in the year it becomes accessible, meaning lump-sum payouts at maturity can push savers over their tax-free thresholds.
• Experts recommend spreading interest payments across tax years or using Individual Savings Accounts (ISAs), which allow up to £20,000 of tax-free savings annually, to mitigate tax exposure.
• Paragon Bank research shows 2.4 million fixed-term, non-ISA accounts will mature soon, with over half a million generating sufficient interest to trigger tax bills.