The tax-free allowance for savings interest, unchanged since 2016, is exceeded by a growing number of savers, particularly as ‘fiscal drag’ sees more citizens crossing into higher tax brackets with frozen thresholds.

Chief executive Jim Harra acknowledged the challenges faced by HMRC in managing the increased demand without a corresponding rise in resources. The department, criticised for service quality and response times, has been directing efforts towards digital solutions to alleviate the strain on their systems.

This development coincides with reports of middle-income families unexpectedly losing child benefits as earnings surpass the £50,000 threshold, with a 1% tax charge imposed for every additional £100 earned. The Chancellor, Jeremy Hunt, is said to be cognisant of the situation but constrained by the tight public finances from offering relief in the upcoming Autumn Statement, the Financial Times reports.

HMRC’s data from July suggests a £6.6 billion tax take from savings interest this year, an increase from £3.4bn in 2022.