You may have heard whispers about HMRC getting tougher on how savings interest is taxed. It’s not just talk – big changes are coming, and they’ll affect many savers and business owners. This blog breaks down what’s happening, when it takes effect, who will feel it most, and what you can do now to stay ahead.
Timeline & key changes
| When | What changes |
|---|---|
| From April 2027 | Banks and building societies will pass your NI number to HMRC so your interest income can be matched to your tax record. |
| Ongoing | ISAs remain tax-free. Traditional savings accounts (non-ISA) are in scope. |
| Currently | Personal Savings Allowance: £1,000 for basic rate, £500 for higher rate. Above that, interest is taxable at your income rate. |
Some of the finer rules are still being confirmed, so stay alert – things may shift.
Who this affects
- Individuals who hold sizeable savings accounts outside ISAs
- Business owners or self-employed people who use surplus cash reserves
- Earners with multiple interest income streams
- Employed savers – HMRC may adjust tax through your PAYE code
In short: if you earn interest beyond your allowance, HMRC’s new data-matching increases the chances of it being flagged.
What you’ll need to do
- Review your savings structure
Maximise ISA use (within your annual allowance) to shelter interest from scrutiny. - Track interest accounts diligently
Maintain clear records: which accounts, amounts, dates, etc. - Prepare for tax code adjustments
For employed savers, HMRC may collect interest tax via PAYE. If so, you may not need to file a special return just for it. - Stay alert for Self Assessment needs
If your total income or interest pushes you over thresholds, a Self Assessment return will be important. - Get advice where needed
If interest income is nontrivial, a quick check with an accountant now can save you hassle – and surprises – later.
Why it’s a big deal
- HMRC is investing significant sums in systems and data integration to ensure these rules are enforceable.
- Even though ISAs are safe, many savers use non-ISA accounts (e.g. for business reserves), which now carry more risk.
- The “invisible” buffer that previously allowed small misreporting may no longer exist.
Want to be ready early?
If you’d like help reviewing your interest exposure, tightening your savings structure, or checking whether you’ll need to file, we’ve got your back.
Drop us a line at hello@completecloud.rocks or use our contact form. We’ll walk you through your options – no jargon, no pressure.