UK savings accounts crackdown explained – What HMRC’s new rules mean for you
From 2027, UK banks must share more savings data with HMRC — a major tax shake-up is coming. Credit: Carl Court/Getty
Chancellor Rachel Reeves has approved new regulations that will see banks hand over more customer savings information to HM Revenue & Customs (HMRC) in a bid to tighten tax collection on interest earnings.
From April 2027, all banks will be required to request National Insurance (NI) numbers from both new and existing savings account holders. The move is designed to help HMRC identify taxpayers who exceed their personal savings allowance and ensure they are taxed accordingly.
The changes, to be set in legislation next year, aim to streamline tax collection, meaning more individuals will have savings tax deducted directly via the PAYE system without the need for a self-assessment return. Current account holders will not yet be affected, although HMRC has not ruled out future expansions of the policy.
While the Government concedes the initiative will bring “significant costs,” it insists better data matching is essential for accuracy. A July consultation response stated: “It is vital we improve our ability to match third-party data to taxpayer records.”
The reforms come amid mounting fiscal pressures. The National Institute of Economic and Social Research recently warned that sluggish economic growth, a weaker jobs market, and increased public spending demands could leave the Chancellor needing to find £50bn in the upcoming autumn Budget.
Currently, banks already share interest income data with HMRC, but the tax authority says up to 20% of that data is “unreadable,” preventing automatic tax collection. This year alone, 3.35 million savers are forecast to have taxable savings income, with 2.64 million expected to receive a bill — up by 120,000 from last year.
The personal savings allowance allows basic-rate taxpayers to earn up to £1,000 in interest tax-free, while higher-rate taxpayers can earn up to £500. Additional rate taxpayers receive no allowance.
Tax experts have urged savers to keep their own records to cross-check HMRC’s calculations. Former Conservative cabinet minister Sir David Davis criticised the measure as “overreach” and a sign of increasing state intrusion.
The reforms are expected to cost HMRC around £35m to implement, while banks could face expenses of up to £10m each, especially for legacy account systems. Industry body UK Finance has called it a “massive undertaking,” noting that only around 10% of customers typically respond to information requests.
Concerns have also been raised over accounts held by minors who do not have NI numbers, as well as the need for banks to share the same data they send to HMRC with customers in an accessible format. The Low Incomes Tax Reform Group and the Association of Taxation Technicians argue that without this transparency, taxpayers may not understand how much they are paying or whether the figure is correct.
HMRC has defended the move, saying the improved data matching will help customers “get their tax right first time” and reduce the risk of error and fraud.
Analysis: What this means for UK residents
This change means that from April 2027, if you have a savings account in the UK, your bank will have to collect your National Insurance number and share it with HMRC. The goal is to make it easier for the tax office to match savings interest data to the right person and automatically collect any tax owed — without you needing to file a self-assessment.
For everyday savers, this could mean less paperwork, but also less control, as tax will likely be deducted directly through PAYE if you exceed your personal savings allowance (£1,000 for basic rate taxpayers, £500 for higher rate, none for additional rate). It also raises privacy concerns because more of your personal financial information will be routinely shared with the government, and mistakes in the matching process could lead to incorrect tax bills.
Banks warn it will be costly and complex to implement, and some experts worry about transparency — meaning savers will need to keep careful personal records to make sure the taxman’s numbers are correct. In short, it’s about efficiency for HMRC, but it will also increase state access to private financial data.