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People who are saving money in a non-ISA savings account could be forced by HMRC to pay even more tax on their interest gained.
People who have a savings account with Santander, Lloyds, Nationwide, Halifax and NatWest could soon be receiving a letter from HMRC.
Laura Suter, director of personal finance at AJ Bell, said, “Many people won’t realise that [fixed rate accounts] could leave them with a tax headache in the future.
“You are taxed on the interest on your savings when it is accessible by you.
“So if you pick a fixed-rate savings account that pays out all the interest at maturity, for tax purposes all of that interest will be counted in one tax year.
“This means that the interest from just one account could take you over your Personal Savings Allowance on its own.”
Suter advised that accounts which pays monthly or yearly could be the best ones to save with.
She added, “This means it is spread across different tax years.
“Or you can opt for a fixed-term ISA savings account, where you won’t pay any tax on the interest.”
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