Martin Lewis issues warning to anybody with £10,000 sat in bank account

Martin Lewis has issued a warning to anybody with £10,000 sat in a savings account. The BBC Sounds podcast host spoke out on ITV The Martin Lewis Money Show, warning a basic rate taxpayer with £20,000 in savings could owe tax within just 12 months.

Mr Lewis, who founded Money Saving Expert, also warned that a higher rate taxpayer - someone earning £50,270 a year - could owe tax on just £10,000 of saving. Discussing tax rules after the Labour Party government, Mr Lewis said: “So look, savings tax is back for many.

"When you get interest on your savings, it is eligible for income tax. It counts as income. But you get a Personal Savings Allowance. What this means is a basic rate taxpayer can earn £1,000 a year of interest and you don’t pay tax on it. It can be in any form of savings account that you like.

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“As a higher 40 per cent taxpayer, you can earn £500, as a top 45 per cent taxpayer if you earn over £125,000 a year you don’t get one of these. So what does that mean in practice? So if you take that top 5 per cent figure, as a basic rate taxpayer if you have over £20,000 in savings at 5 per cent, you would earn more than a grand of interest so everything above that would be taxed.

“As a higher rate taxpayer it’s £10,000. So for those people saving £100, £1,000, £2,000, it’s irrelevant to you if you’re a basic rate or higher rate taxpayer. For those people who’ve got savings that get into the tens of thousands of pounds, tax starts to become more important.

“And the reason it’s come back is, when interest rates are 1 per cent, to earn £1,000 of interest you needed a hell of a lot in savings. Now they’re 5 per cent, you need a fifth of it, so it really has changed very much.”