Have you got more than £10,000 in savings? HMRC has issued a vital reminder that’s got thousands of UK savers talking. It’s not about taxing your savings pot. Instead, it’s a clear warning: if your interest income tops £10,000 in a tax year, you must register for Self Assessment.
This update surfaced in September 2025 via HMRC’s social media response. With high street rates still above 4%, more people are earning bigger returns. But miss this rule, and you could face penalties.
Don’t panic. Most savers won’t hit £10,000 interest – that’s roughly £200,000+ in savings at 5%. Read on for simple steps to stay compliant and protect your cash.
The £10,000 Threshold Explained
HMRC’s rule is straightforward. It’s income from savings and investments that matters – think bank interest, dividends, or peer-to-peer lending.
If this exceeds £10,000 in the tax year (6 April to 5 April), register for Self Assessment by 5 October after the tax year ends.
Under £10,000? HMRC usually adjusts your tax code via PAYE. Banks send them your interest details automatically.
This isn’t new, but high rates mean more savers are affected – especially pensioners with frozen tax thresholds.
Who Must File Self Assessment?
Not everyone with £10,000+ savings needs to act. It’s purely about earnings over £10,000.
- Yes, register if: Savings interest + dividends > £10,000. Examples: £12,000 bank interest or £8,000 interest + £3,000 dividends.
- No need if: Total under £10,000, even with a huge pot. HMRC handles it.
- Pensioners beware: State pension + savings can push you over. Over 1 million may pay tax this year.
- Self-employed? Already filing? Just add savings details.
Check your bank statements now. Use HMRC’s online tool for a quick estimate.
Personal Savings Allowance Breakdown
Even over allowances, you get tax-free interest via the Personal Savings Allowance (PSA). It kicks in after your Personal Allowance (£12,570).
Your PSA depends on your tax band:
- Basic rate (20%): £1,000 tax-free interest.
- Higher rate (40%): £500 tax-free.
- Additional rate (45%): £0 tax-free.
Plus, Starting Rate for Savings: Up to £5,000 at 0% if your other income is below £17,570.
Example: Basic rate earner with £800 interest? All tax-free. £1,200? Pay 20% on £200.
Bands are frozen until 2028, so inflation pushes more into higher tax.
How Tax Gets Collected
Banks report your interest to HMRC by May. They adjust your tax code for the next year.
- Employed or pension? Simple PAYE tweak – you might get a letter by March.
- Over £10,000 income? File Self Assessment online by 31 January.
- Owe tax? Pay in full or via Time to Pay if needed.
Reclaim overpaid tax within 4 years using form R40. No Self Assessment? Do it online.
Smart Strategies to Minimise Tax
Beat the taxman legally with these proven moves. Shift now for 2025/26 tax year.
- Max your ISA: £20,000 allowance. Cash ISAs pay 4-5% tax-free forever.
- Use Personal Allowance: Low earners – let it cover interest first.
- Premium Bonds: NS&I – tax-free prizes, no interest but safe.
- Spread accounts: Joint accounts split interest 50/50.
- Fixed-rate bonds: Lock in rates, but check tax impact.
A £20,000 Cash ISA at 4.5%? £900 tax-free yearly. Game-changer.
Steps to Check and Act Now
Time is ticking. Follow this 5-minute plan.
First, log into your online banking. Download 2025/26 interest certificates.
Second, tally total savings income. Over £10,000? Register at gov.uk/register-for-self-assessment.
Third, contact HMRC via webchat if unsure. Mention “savings interest declaration”.
Fourth, open an ISA today – providers like Chase or Plum offer easy transfers.
Fifth, bookmark HMRC’s savings calculator. Update it yearly.
Act before 5 April 2026 deadline for peace of mind.
Pensioners: Extra Alerts
Over-65s are hit hardest. Frozen personal allowances mean state pension (£11,500+) eats into tax-free space.
HMRC letters are landing, warning of owed tax. Ignore them? Penalties up to 30%.
Top tip: Transfer to spouse’s ISA if they’re basic rate. Doubles your allowance.
Martin Lewis urges: “Check now – don’t wait for a nasty surprise.”
Common Myths Busted
Myth 1: “Tax on £10,000 savings.” No – only on interest earned.
Myth 2: “ISAs are only for stocks.” Wrong – Cash ISAs shield everyday savings.
Myth 3: “HMRC forgets.” Nope – They have your data. Late filing? £100 fine.
Stay informed via MoneySavingExpert or GOV.UK alerts.
Conclusion
HMRC’s update is a wake-up call for UK savers: track your interest, file if over £10,000, and shelter cash in ISAs. With rates steady and thresholds frozen, proactive steps save hundreds in tax. You’re not alone – millions are adapting. Review your pots today, register if needed, and sleep easy knowing your savings work harder for you. For personalised advice, chat with a financial adviser or HMRC. Secure your financial future – it starts now.