HMRC savings tax letters are notices sent when HM Revenue and Customs believes someone has tax to pay on interest earned from savings. The document may be a PA302 Simple Assessment, a P800 tax calculation, or a PAYE tax-code notice.
Receiving a letter does not automatically mean HMRC’s calculation is correct. Identify the document, compare its savings-interest figure with your bank records, check which tax-free allowances apply and act before the deadline shown.
Why Is HMRC Sending Savings Tax Letters in 2026?
HMRC is issuing Simple Assessment letters for the tax year running from 6 April 2025 to 5 April 2026. These letters are sent when tax is due on income that has not been collected through Pay As You Earn, known as PAYE, or through Self Assessment.
According to HMRC’s 2026 Simple Assessment announcement, around 1.8 million PA302 letters will be issued. Savings interest is one reason someone may receive a letter, but other possible reasons include untaxed pension income, dividends, a second income or an amount too large to collect through a tax code.
Working-age recipients began receiving letters from 30 June 2026. Letters to pensioners are due to begin from 12 August 2026, while a further group of letters based on bank and building-society interest data is expected between October and December 2026.
The 1.8 million figure should therefore not be described as the number of savers facing tax bills. It covers the wider Simple Assessment programme.
Savings interest has generally been paid gross since 2016, meaning banks do not normally deduct Income Tax before paying it. If someone receives more interest than their available tax-free allowances cover, HMRC must collect the resulting tax separately.
Which HMRC Letter Have You Received?
“HMRC savings tax letter” is a common search phrase rather than the official title of a single document. The action required depends on which notice has arrived.
PA302 Simple Assessment letter
A PA302 is an official Simple Assessment. It sets out the income HMRC has used, the tax it believes is due and the payment deadline.
HMRC may issue one where Income Tax cannot be collected automatically, where at least £3,000 is owed, or where tax is due on State Pension income. The taxpayer does not normally need to complete a tax return solely to deal with the PA302.
A recipient who thinks the calculation contains incorrect information must contact HMRC within 60 days. Unless HMRC agrees to postpone the payment date, challenging the calculation does not automatically suspend the original deadline.
P800 Tax Calculation
A P800 is issued after HMRC compares the Income Tax someone paid through PAYE with the amount it calculates they should have paid.
The calculation may show:
- an underpayment
- an overpayment and refund
- or no further tax to pay
Where a relatively small underpayment can be collected through PAYE, HMRC may adjust the person’s future tax code rather than require a separate direct payment.
PAYE Tax-Code Notice
HMRC may change an employee’s or pensioner’s tax code to collect tax on savings interest through deductions from salary or pension income.
The estimate used for the current year may be based on interest received in the previous tax year. This means the figure may be inaccurate where someone has closed an account, moved their savings, received a one-off amount of interest or experienced a major change in their balance.
Self Assessment Calculation
Someone already completing a Self Assessment return should normally include their taxable savings interest in that return.
HMRC says a person must register for Self Assessment where income from savings and investments exceeds £10,000. Other circumstances can also create a filing requirement, so the £10,000 threshold should not be treated as the only test.
| Document | What it usually means | Normal next step |
|---|---|---|
| PA302 Simple Assessment | HMRC has calculated tax that cannot be collected automatically | Check the figures and pay or challenge by the deadline |
| P800 underpayment | A PAYE reconciliation shows that tax is owed | Check whether HMRC will collect it through PAYE |
| Tax-code notice | HMRC has adjusted PAYE for estimated untaxed income | Check the savings estimate and resulting code |
| Self Assessment calculation | Savings income has been declared through a tax return | Verify the declared interest and tax calculation |
| P800 refund | HMRC believes too much tax was paid | Check the refund instructions and calculation |
What Will an HMRC Savings Tax Letter Include?
The exact wording and layout will depend on whether the document is a PA302 Simple Assessment, a P800 tax calculation or a PAYE tax-code notice. However, an HMRC savings tax letter may include:
- Your personal details: Your name, address and relevant tax reference.
- The type of notice: This may identify the document as a Simple Assessment, P800 calculation or tax-code notice.
- The tax year: The period covered by the calculation, such as 6 April 2025 to 5 April 2026.
- Savings-interest income: The amount of bank or building-society interest HMRC has included.
- Other taxable income: This may include employment income, pension income, dividends or other untaxed income.
- Tax-free allowances: The calculation may show how allowances, including the Personal Allowance or Personal Savings Allowance, have been applied.
- Tax already paid: Any Income Tax already collected through PAYE or another method.
- The amount still due: The remaining tax HMRC believes must be paid.
- How the tax will be collected: The letter may request direct payment or explain that the amount will be collected through a future tax-code adjustment.
- The payment deadline: The date by which the outstanding amount must be paid.
- Instructions for challenging the calculation: Details of how and when to contact HMRC if the figures appear incorrect.
- Payment details: Approved methods for paying the bill, where direct payment is required.
- HMRC contact information: Details for discussing the calculation or payment difficulties.
The figures should be compared with annual interest certificates, bank statements and savings-account records before payment. A genuine HMRC letter may still contain estimated, duplicated or incorrectly allocated information, so the authenticity of the letter and the accuracy of the calculation should be checked separately.
The exact content will vary according to the type of HMRC notice and the taxpayer’s circumstances.
What Should You Not Do With an HMRC Savings Tax Letter?
Receiving an HMRC savings tax letter can be worrying, but acting too quickly or doing nothing can make the situation harder to resolve. Avoid these common mistakes:
- Do not ignore the letter: Missing the payment or challenge deadline could lead to further contact from HMRC and possible interest, penalties or recovery action, depending on the circumstances.
- Do not assume the calculation is correct: Compare HMRC’s savings-interest figure with your annual interest certificates, bank statements and account records.
- Do not assume the letter is genuine: Confirm the notice through your Personal Tax Account or contact HMRC using details obtained independently from GOV.UK.
- Do not pay through an unexpected link: Avoid links in unsolicited emails, texts or messages claiming to be from HMRC. Access official services directly.
- Do not provide passwords or security codes: HMRC will not need your online banking password, Government Gateway password or one-time security code to discuss a tax calculation.
- Do not include tax-free ISA interest in your taxable total: Qualifying ISA interest does not normally count towards the Personal Savings Allowance.
- Do not overlook old or closed accounts: Interest paid before an account was closed may still belong to the tax year shown on the letter.
- Do not forget joint-account ownership: Check that HMRC has attributed only the correct share of interest to you.
- Do not wait until the payment deadline to report an error: A Simple Assessment challenge should normally be raised within 60 days of receiving the notice.
The safest approach is to verify the letter, check the calculation and respond through an official HMRC channel before the stated deadline.
How Does HMRC Know About Your Savings Interest?
UK banks and building societies are required to submit annual information to HMRC about interest paid or credited to reportable account holders.
HMRC uses this data to populate tax records, issue PAYE coding notices, calculate underpayments and check whether Self Assessment returns appear complete.
The figure shown in an HMRC savings tax letter may combine interest from several accounts. It may include accounts held with different providers, low-balance accounts and accounts that were closed during the tax year.
HMRC’s figure should still be checked. Problems may arise because:
- interest has been duplicated
- an amount has been allocated to the wrong tax year
- estimated and final figures have both been included
- a closed account remains in an estimate
- tax-free ISA interest has been included incorrectly
- joint-account interest has been allocated incorrectly
- or information has been matched to the wrong taxpayer
Joint savings accounts
Interest from a joint account is normally divided equally between the account holders for tax purposes. A different allocation may apply where the beneficial ownership is unequal and HMRC has been notified appropriately.
For example, £800 of interest from an account owned equally by two people would generally be treated as £400 for each account holder, rather than £800 each.
How Much Savings Interest Can You Earn Tax-Free?
Several allowances may protect savings interest from tax. They must be considered in the correct order and depend on the taxpayer’s other income.
Personal Allowance
A person may use any unused Personal Allowance against savings interest.
Someone whose wages, pension and other taxable income already use the full Personal Allowance will not have any of it left to cover interest.
Starting Rate for Savings
People with relatively low non-savings income may qualify for a starting rate for savings of up to £5,000.
The maximum £5,000 band is reduced by £1 for every £1 of other income above the Personal Allowance. It is not available where other income is £17,570 or more.
Personal Savings Allowance
The Personal Savings Allowance applies according to the taxpayer’s Income Tax band.
| Income Tax position | Personal Savings Allowance |
|---|---|
| Basic-rate taxpayer | £1,000 |
| Higher-rate taxpayer | £500 |
| Additional-rate taxpayer | £0 |
The allowance is effectively a 0% tax band for qualifying savings income. It does not reduce the amount held in an account, and it should not be confused with the annual ISA subscription allowance.
Taxable interest above the available allowance is normally charged at the person’s applicable Income Tax rate.
Tax-Free Savings Interest
Qualifying interest earned within an Individual Savings Account does not count towards the Personal Savings Allowance. Certain National Savings and Investments products are also tax-free.
This means a person could receive £1,000 of taxable bank interest and a further amount within a Cash ISA without the ISA interest using any of their Personal Savings Allowance.
Worked Example of Savings Interest Tax
Consider a basic-rate taxpayer who receives £1,400 of taxable savings interest during the 2025–26 tax year.
Their Personal Savings Allowance covers the first £1,000. The remaining £400 is taxable at 20%, producing an illustrative tax liability of £80.
The calculation is:
| Calculation | Amount |
|---|---|
| Total taxable savings interest | £1,400 |
| Personal Savings Allowance | £1,000 |
| Interest remaining taxable | £400 |
| Tax at 20% | £80 |
The outcome would be different if part of the £1,400 came from an ISA, the individual qualified for the starting rate for savings or the interest moved part of their total income into a higher tax band.
A higher-rate taxpayer receiving the same £1,400 would normally have a £500 Personal Savings Allowance. Subject to their wider circumstances, £900 could therefore remain taxable.
This is a simplified illustration, not personalised tax advice.
Could Your Savings Interest Need HMRC Action?
Complete the two short checks to estimate how much interest may exceed your Personal Savings Allowance and see what to do with your HMRC notice.
Check Your Savings Allowance
Enter taxable savings interest only. Do not include qualifying ISA interest.
Choose Your Next Action
Select the notice received and whether HMRC’s savings figure agrees with your records.
What Should You Check Before Paying?
Check four details on HMRC savings tax letters:
- Confirm the document type and tax year.
- Compare the interest figure with annual statements or interest certificates from every provider.
- Check that ISA interest and the correct share of joint-account interest have been excluded.
- Verify the applicable allowances, challenge period and payment deadline.
Do not ignore the notice because a figure appears incorrect. Contact HMRC promptly, explain which amount is disputed and retain evidence supporting the correction.
What Is the Simple Assessment Payment Deadline?
For the 2025–26 tax year, a Simple Assessment received before 31 October 2026 must normally be paid by 31 January 2027.
Where the letter is received on or after 31 October 2026 and concerns 2025–26 or an earlier tax year, payment is normally due within three months of the letter’s date. The specific date printed on the PA302 should always be checked.
HMRC allows recipients to make one payment or divide the balance into smaller payments, provided the full amount reaches HMRC by the deadline. Someone who cannot pay on time should contact HMRC about payment support rather than allowing the deadline to pass without action.
What if HMRC’s Savings-Interest Figure Is Wrong?
Start by adding together the interest shown on annual certificates, statements and online banking records for the relevant tax year.
Compare that total with the figure used by HMRC. Remember to include interest from accounts that were closed during the year, but exclude qualifying ISA interest.
The LITRG guidance on checking savings-interest figures identifies several reasons a figure may look unfamiliar, including combined interest from multiple accounts, previous-year estimates, duplicated data, incorrect joint-account allocations and interest attributed to the wrong year.
HMRC can be asked for a breakdown showing the provider, account information and interest recorded. When challenging the figure, explain:
- which amount is wrong
- what the correct amount should be
- how the correction was calculated
- and which documents support it
For a Simple Assessment, the challenge must normally be made within 60 days. HMRC may issue a revised PA302 if it accepts the correction. If HMRC rejects the challenge, it should explain its decision and how to appeal.
What if You Owe Savings Tax but Receive No Letter?
The absence of an HMRC savings tax letter does not confirm that no tax is payable.
HMRC guidance says an employed person or pension recipient who exceeds their savings allowance and has not received a calculation by 31 March following the tax year should contact HMRC as soon as possible. A person outside PAYE or Self Assessment may also need to act if they know tax is due.
The Association of Taxation Technicians’ warning to savers highlighted limitations in matching bank-account information to individual tax records. The professional body warned that responsibility for paying the correct tax ultimately remains with the taxpayer, even where HMRC has not issued a calculation.
Someone already completing Self Assessment should include taxable savings interest in their return. Other taxpayers who believe they have exceeded their allowances should contact HMRC rather than assume the matter has been settled automatically.
How to Check Whether an HMRC Savings Tax Letter Is Genuine?
Official PA302 letters may arrive by post or appear in a Personal Tax Account. HMRC confirmed both delivery methods in its July 2026 announcement.
Before paying:
- sign in to the Personal Tax Account independently rather than through an unexpected link
- obtain HMRC contact details directly from GOV.UK
- compare the reference number and tax year with the online record
- do not disclose banking passwords, one-time security codes or HMRC login details
- and contact HMRC directly where the demand or payment method seems unusual
A genuine letter can still contain an incorrect calculation, so authenticity and accuracy should be checked separately.
What to Do After Receiving an HMRC Savings Tax Letter?
Follow these steps:
- Identify whether the notice is a PA302, P800, tax-code notice or Self Assessment calculation.
- Confirm the tax year covered.
- Add together the taxable interest from every relevant account.
- Exclude qualifying tax-free interest and check any joint-account allocation.
- Apply the Personal Allowance, starting rate for savings and Personal Savings Allowance where relevant.
- Raise incorrect figures within the applicable time limit.
- Pay the confirmed amount or contact HMRC about payment support before the deadline.
Keep the letter, calculations, bank statements and evidence of any communication with HMRC.
Conclusion
HMRC savings tax letters should be checked carefully rather than ignored. The document could be a PA302 Simple Assessment, a P800 calculation or a PAYE tax-code notice, and each can require a different response.
Recipients should confirm the tax year, reconcile HMRC’s interest figure with their bank records and make sure the correct tax-free allowances have been applied. A 2025–26 Simple Assessment received before 31 October 2026 will normally be payable by 31 January 2027, while an incorrect calculation should generally be challenged within 60 days.
Acting promptly is important even when the figures appear wrong. The safest approach is to identify the disputed amount, provide supporting evidence and confirm directly with HMRC whether the original payment deadline still applies.
This article provides general information about UK tax procedures and does not replace advice based on individual circumstances.
Frequently Asked Questions
Why has HMRC sent me a letter about savings interest?
HMRC may believe you received taxable savings interest that was not fully collected through PAYE or Self Assessment. The calculation may be based on information supplied by banks and building societies.
Is an HMRC savings tax letter the same as a PA302?
Not always. A PA302 Simple Assessment is one type of HMRC savings tax letter, but you may instead receive a P800 calculation or a notice showing a change to your PAYE tax code.
What is the difference between a P800 and a Simple Assessment?
A P800 reconciles tax paid through PAYE with the amount HMRC calculates was due. A Simple Assessment creates a direct tax bill where HMRC cannot collect the amount automatically or another PA302 condition applies.
Do banks report savings interest to HMRC?
Yes. UK banks and building societies generally submit annual information to HMRC about interest paid or credited to reportable account holders. HMRC uses this data for tax codes, calculations and compliance checks.
What should I do if HMRC’s savings figure is wrong?
Gather statements and annual interest certificates, calculate the correct amount and contact HMRC promptly. A Simple Assessment should normally be challenged within 60 days.
Does Cash ISA interest count towards the Personal Savings Allowance?
No. Qualifying Cash ISA interest is tax-free and does not normally use any of the Personal Savings Allowance.
What happens if I ignore an HMRC savings tax letter?
The tax will remain unpaid and HMRC may contact you about the outstanding balance. Contact HMRC before the deadline if you dispute the calculation or cannot pay on time. A dispute does not automatically postpone payment unless HMRC confirms that it has delayed the due date.
