Brits are being advised they can do one thing to help protect their hard-earned savings from being taxed. The message from Moneyfactscompare comes as April marks 10 years since the Personal Savings Allowance (PSA) was introduced.

The PSA lets basic-rate taxpayers to earn up to £1,000 in interest on savings each year without having to pay income tax. Higher-rate taxpayers can earn up to £500 while additional-rate taxpayers don’t benefit from the savings perk.

But Rachel Springall, finance expert at Moneyfactscompare.co.uk, said while the PSA protected savings interest from tax when it was launched in 2016, it is outdated and needs to change.

Moneyfacts, citing analysis of HMRC data by Yorkshire Building Society, said basic-rate taxpayers have paid about £4.7billion in tax on their savings since April 2016.

Ms Springall said the fact millions of ordinary people risk paying tax on their savings showed how the PSA has failed to move with the times. This is because since the PSA was introduced, wages have risen while income tax thresholds have stayed the same.

It means more people have been pulled into higher income tax bands, which in turn means their PSA is cut.

Moneyfacts said the number of higher-rate taxpayers increased from around 4.4 million in 2016 to seven million in 2025/26.

The number of additional-rate taxpayers rose from 0.4 million to 1.23 million over the same period, according to Moneyfacts.

And because savings interest rates are higher than they were in 2016, savers do not need to have as much money in their accounts to breach the limit of their PSA. In 2016, a higher-rate taxpayer could have saved up £50,000 in a one-year fixed account paying a typical rate of 1% before breaching their PSA.

If they now deposited £12,000 into the current market-leading one-year bond paying 4.50% AER, they would earn £540 in interest and be liable to pay tax, Moneyfacts reports.

Ms Springall said as millions of people risk earning over the PSA, Cash ISAs have “proven their worth”.

Savers can deposit up to £20,000 in Cash ISAs each tax-year, with the interest earned exempt from income tax.

She said: “Someone who has or is about to move up an income tax band would be wise to use up their Cash ISA allowance, or lose it, as it resets on April 6.”

Ms Springall said even people not immediately at risk of paying tax on their savings interest may benefit from putting money in an ISA as this will protect it from any potential, future tax liabilities.

Those aged under 65 will only be able to deposit up to £12,000 in Cash ISAs each year from April 2027. The allowance is to remain at £20,000 for those aged 65 and over.