The findings of a Freedom of Information request to His Majesty’s Revenue and Customs (HMRC), completed in July 2025, show more than 3.35 million are expected to do so, up from 3.06 million in 2020–21, This could rise further as income thresholds remain frozen and interest rates remain elevated.
While government plans to reform Cash ISAs have been put on hold, at least for the near future, Nottingham Building Society is urging ministers to consider the wider tax landscape and cost-of-living pressures before making changes that could reduce the protection ISAs offer for savers.
HMRC data shows that the number of individuals declaring taxable interest through self-assessment has, with the exception of a slight dip in 2021-22, risen steadily over the past five years.
The official projections of HMRC Income Tax Liabilities Statistics, published in June 2025, show a sharp increase in the total number of people paying income tax, from 34.5 million in 2022-23 to 39.1 million by 2025-26.
These figures include a projected 30.8 million basic rate and savers rate taxpayers, up 6.8% over the same period, making up nearly 79% of all taxpayers. Over the same period, the number of higher rate taxpayers is expected to jump by nearly 39% to 7.08 million, while the number of additional rate taxpayers is set to more than double, up 115% to 1.23 million.
These shifts are largely being driven by fiscal drag – the freezing of tax thresholds pulling more people into higher tax bands even with only modest nominal income growth.
Commenting on the figures, Harriet Guevara, chief savings officer at Nottingham Building Society, said: “These figures highlight a growing and often hidden tax burden on ordinary savers. With the number of basic-rate taxpayers projected to rise by nearly two million in just three years, and the number of additional-rate taxpayers set to more than double, more people than ever are being pulled into paying tax on their hard-earned savings.
“At a time when families are trying to build financial resilience amid frozen thresholds and rising living costs, the government should be doing more to reward and protect savers.
“At Nottingham Building Society, we’re seeing this shift play out in real time. More than half of our fixed-rate ISA customers used the full £20,000 allowance last year, rising to 65% among our branch savers. These are not high-net-worth investors, but everyday people saving for a deposit, building a retirement fund, or creating a financial safety net.
“[We are] calling for the government’s upcoming consultation on Cash ISAs to consider the long-term impact on household finances and savings culture, and to ensure the system continues to provide meaningful protection for basic-rate savers, many of whom now find themselves unexpectedly dragged into paying tax on their interest income.”
