More people are at risk of having to pay tax on their savings as interest rates have risen pushing savers towards their tax-free limit, warned AJ Bell, following a freedom of information request to HMRC to identify the scale of the issue.

HMRC is well aware of the issue and taxpayers need to be careful not to fall foul of the tax authority, especially as banks share interest earned figures directly with the tax authority.

Almost 2.1m savers are set to face tax bills for the first time as interest rates hit an average 5% across the best rate bank savings accounts, double the number affected last year. This figure is up from just 650,000 in the 2021-22 tax year across all tax rates.