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State pensioners that earned interest on their savings accounts are at risk of receiving an HMRC tax bill.

Investment platform AJ Bell found that 1,160,000 state pensioners are expected to pay income tax on their savings for this current financial year, 2025-26.

Personal Savings Allowance gives savers who earn less than £50,270 a tax-free £1,000 they can earn in interest - before they have to pay 20% tax on every £1 earned above that threshold.

However, those earning £50,270 or more can only earn £500 savings interest, and these tax bands have been frozen for years and will remain frozen until 2028 at the earliest.

But savers can use a Cash ISA to protect their money from taxation, with the current £20,000 tax-free limit.

Charlene Young, senior pensions and savings expert

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