Marvin OnumonuRetirement-age savers will see a steep rise in the tax they pay on savings interest, new analysis from Paragon Bank found.
A Freedom of Information (FOI) request submitted by Paragon to HMRC showed that people aged 65 and over were forecast to pay £2.5bn in tax on savings interest in the 2025/26 tax year.
This was a 215% increase compared to 2022/23.
Tax paid by savers under 65 was also expected to go up sharply, with an increase of 186% to £3.6bn over the same period.
The share of total savings interest tax paid by those aged 65 and over was set to rise from 39% to 41%.
The biggest increases were among older savers in the additional rate tax band, with contributions projected to go up by 307% to £1.1bn.
Higher-rate taxpayers in this age group would see a 169% increase to £885m, while basic-rate taxpayers would pay 163% more, at £518m.
Andrew Wright, head of savings at Paragon Bank, said: “We’re witnessing a significant and rapid escalation in the tax burden on savers nearing or enjoying retirement.
“This could have a profound impact on their long-term financial wellbeing.
“Many mature savers are facing unprecedented tax charges on the interest earned from their savings, which can have a substantial impact on their long-term financial wellbeing.”
Wright added: “One effective way to mitigate some of this increased tax burden is by transferring funds into an ISA, where savings interest is sheltered from tax.
“ISAs remain an accessible and flexible option, empowering savers to protect more of their hard-earned money and make the most out of their nest eggs as they plan for, or live through, retirement.”
