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A warning has been issued by a major building society regarding a potential tax hike on savers' interest earnings, which would be an unexpected hit following recent Budget announcements. The warning stems from the government's plan to increase the tax rates applied to unearned income starting from April 2027 . This change, combined with frozen tax-free savings allowances, means millions more people could be inadvertently drawn into paying tax on their savings interest.

Tax Rate Increase: The central issue is a planned increase in the income tax rates applied to savings interest, which will come into effect from April 2027 . Once a saver exceeds their Personal Savings Allowance (PSA), they will face a tax hike of 2% across all income tax bands .

Two-Tier Tax System: Th

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