Last updated: 14 October 2026
Do you pay tax on savings interest from a closed account?
Yes, if the interest takes your savings income over your allowances. Interest is taxed in the tax year it’s paid or credited to you, including the final interest paid when you close an account. For fixed-rate bonds, interest is taxed when it becomes available to you, which may be at maturity. Most people don’t pay tax because the Personal Savings Allowance covers £1,000 of interest for basic rate taxpayers, £500 for higher rate taxpayers, and the starting rate for savings may cover up to £5,000 more for those on low incomes.
When interest is taxed
| Account type | Taxed when |
| Easy access savings | When interest is credited, usually monthly or annually |
| Account closed part-way through year | Final interest taxed in year of closure |
| Fixed-rate bond paying at maturity | When the interest can be withdrawn, often at maturity |
| Fixed-rate bond paying annually | Each year as paid |
| Cash ISA | Never |
How HMRC finds out
Banks report interest to HMRC each year, including on closed accounts. HMRC uses this to adjust your tax code or send a Simple Assessment. If you file Self Assessment, include the interest yourself, as HMRC’s figures may not match.
Example
Andrew, a higher rate taxpayer, closes a 2-year fixed-rate bond in May 2026. It pays £2,400 interest at maturity. He also had £300 of interest from an easy access account. In 2026/27, his savings income is £2,700. After his £500 allowance, £2,200 is taxed at 40%, costing £880. Had the bond paid interest annually, the tax would have been spread over 2 years, using his allowance twice.
If the account is in a dead person’s name
Interest paid up to the date of death is taxed on the deceased and included in their final tax return. Interest paid afterwards belongs to the estate and is taxed on the executors, unless within the £500 estate exemption.
Joint accounts
Interest is split equally between joint holders unless you can show different ownership.
Rates from April 2027
Savings income tax rates rise to 22%, 42% and 47% from 6 April 2027. If you have a choice about when a bond matures, maturity before then will be taxed at current rates.
Common mistakes
- Thinking interest from a closed account isn’t reported
- Spreading bond interest across years when it all became available at maturity
- Forgetting interest from accounts closed early in the year
- Not checking HMRC’s estimate in your tax code
Records to keep
Keep closing statements, which show the final interest paid and the date, and annual interest certificates. These help if HMRC’s figures differ from yours.
Keeping interest tax-free
If you regularly use up your allowance, consider moving savings into a cash ISA, where the £20,000 annual limit applies, or Premium Bonds, where prizes are tax-free. Married couples can also hold more savings in the name of the spouse with unused allowance.
Frequently asked questions
Do I need to tell HMRC?
Only if you file Self Assessment or HMRC hasn’t picked it up and tax is due.
What if the bank sent no statement?
Ask for an interest certificate.
Is interest from a foreign account taxable?
Yes, if you’re UK resident.
Can I reclaim tax if I overpaid?
Yes, within 4 years.
Related: tax deducted from interest, building society bonuses and ISA tax implications.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with savings income tax. See our tax refund accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 14 October 2026. It is not personal advice, so speak to an accountant about your own situation.
