Tax crackdown on savings accounts: Chancellor Rachel Reeves approves new rules for HMRC to automatically collect more tax
Chancellor Rachel Reeves has approved new rules that will allow HMRC to collect tax automatically from savers in the UK.
According to The Telegraph, banks will be required to ask new and existing customers for their National Insurance number from April 2027. This will make it easier for HMRC to track and tax savers who breach their personal savings allowance.
Workers will then be taxed directly from their pay-packet, rather than being required to submit a self-assessment. The requirement to share details will only apply to customers who open a saving account, not current account customers, however a government source told the newspaper that further changes in the future may not be ruled out.
Under current rules, the interest earned on saving by customers is shared with HMRC but following a consultation into the matter, it was found that as much as 20% of the information is “unreadable” and therefore tax could not be automatically collected.
Under current rules, UK savers have a personal allowance of up to £1,000 per year, while those on the higher income tax band can earn up to £500 interest tax-free. Those on the additional income tax rate have no personal savings allowance.
An HMRC spokesman said: “These reforms will make it easier for customers to get their tax right first time, including paying tax on savings income, by improving our ability to match third-party data to taxpayer records. Making better use of data will also help us prevent error and fraud on behalf of the honest majority.”
It comes after Chancellor Rachel Reeves admitted during her autumn budget that £50bn would need to be found to fill a “black hole” in the country’s finances. A think tank, the National Institute of Economic and Social Research (Niesr), recently said that taxes rises must be implemented after missing its self-imposed target by £41.2bn.
Stephen Millard, deputy director for macroeconomics at Niesr, said: "If she wants to raise £40bn then I think one of the big taxes is going to have to be raised. If she does that then it will break the Labour promise about raising taxes on working people."