Additional rate taxpayers are expected to pay an average of £6,540 in tax on savings income in 2026-27, up £2,830, or 76%, compared with four years ago, according to figures obtained by Paragon Bank.

The average tax liability for additional rate taxpayers has risen from £3,710 in 2022-23, while basic rate taxpayers are forecast to pay an average of £620, up 7% from £580. Higher rate taxpayers, meanwhile, are expected to pay £1,710, relatively unchanged from £1,740 four years earlier.

The figures show the growing tax burden on savers with larger balances held outside tax-free accounts, as higher interest rates and fiscal drag push more people into higher tax brackets and reduce their personal savings allowance.

Andrew Wright, head of savings at Paragon Bank, said: “Better savings rates have been good news for savers, but they can also come with a higher tax bill.

“Unlike basic and higher rate taxpayers, additional rate taxpayers do not receive a Personal Savings Allowance, so tax may be due from the first pound of interest they earn. Checking the total interest earned across all your accounts and making use of your ISA allowance can help you understand your position and protect more of your returns from tax.”

The figures were obtained through a Freedom of Information request to HMRC, with the 2025-26 and 2026-27 figures based on forecasts.

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