HMRC Is Sending P800 Tax Calculations: Is UK Bank Interest Taxable in 2026?

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Have you received an HMRC P800 tax calculation or a PA302 Simple Assessment referring to interest earned on savings? Do not immediately assume that the bank or HMRC has made an error—and do not assume that tax was automatically deducted merely because the bank paid the interest.

HMRC confirmed in Agent Update 148, published on 15 October 2026, that it began issuing P800 calculations and PA302 notices from October 2026 in relation to bank and building-society interest for the 2025/26 tax year, from 6 April 2025 to 5 April 2026. This is an HMRC calculation and notification exercise. It is not a new tax on bank interest introduced in 2026.[1]

1. How much UK savings interest can be tax-free?

Whether interest from a non-ISA account is taxable depends on the individual's total income, tax band and available allowances. The usual Personal Savings Allowance (PSA) is:[2]

Income-tax band：Basic-rate taxpayer；Usual annual PSA：£1,000
Income-tax band：Higher-rate taxpayer；Usual annual PSA：£500
Income-tax band：Additional-rate taxpayer；Usual annual PSA：£0

The allowance applies per person and per tax year, not separately to each bank account. The applicable tax band is determined after considering taxable savings interest together with other income.

Other provisions can also affect the result:

Any unused Personal Allowance may be available against part of the interest.
Some people with lower non-savings income may qualify for the starting rate for savings, worth up to £5,000. This band reduces as other income increases.
Interest arising within a qualifying Individual Savings Account (ISA) is normally free of UK Income Tax and should not be confused with ordinary savings-account interest.[2][3]

Simplified example: Assume that a person received employment income of £34,000 and non-ISA bank interest of £1,300 in 2025/26, remains a basic-rate taxpayer and has no other relevant income or adjustments. If the £1,000 PSA applies, £300 is taxable. At 20%, the illustrative tax on the interest is £60. This example explains the method; it does not mean that everybody receiving £1,300 of interest owes £60.[2]

2. What is the difference between a P800 and a PA302?

A P800 is HMRC's annual Income Tax calculation. It may show an underpayment or an overpayment, and not every P800 requires an immediate payment.[4]

A PA302, also described as a Simple Assessment, is a formal tax assessment. HMRC may issue one where an underpayment cannot be collected through PAYE coding or in certain cases where the amount is too large for that method. The notice sets out the amount, payment instructions and deadline.[1][5]

Where an individual pays Income Tax through PAYE and meets the relevant conditions, HMRC may collect an underpayment by adjusting a future tax code. A taxpayer should therefore read the notice carefully rather than automatically transferring the amount shown on any P800.[4]

3. Why might HMRC issue a second Simple Assessment?

HMRC states that some initial 2025/26 Simple Assessments may not have included bank interest because the relevant data had not yet been incorporated. Once further bank information is available, HMRC may issue a second assessment for the same tax year.[1]

The important point is that the second notice may show the total tax assessed for the year, even where an amount under the first notice has already been paid. Taxpayers should reconcile payment records against the latest assessment and establish the remaining balance. They should neither ignore the later notice nor pay its headline total again without checking whether earlier payments have been credited.[1]

4. Five checks to make after receiving a notice

Confirm the tax year. Check that the calculation concerns 6 April 2025 to 5 April 2026, rather than the current 2026/27 tax year.
Reconcile the interest figures. Total the interest from all ordinary savings accounts for the year. Joint-account allocations should also be checked; HMRC generally assumes that joint interest is divided equally between account holders unless a different treatment applies.[1]
Check allowances and tax bands. Consider the PSA, any unused Personal Allowance and the starting rate for savings. Do not mistake the account balance or deposited capital for interest income.[2]
Check tax already paid. Look for an earlier Simple Assessment payment and any PAYE tax-code adjustment covering the same amount.[1][4]
Follow the procedure for the notice received. Use GOV.UK to verify account and payment details. If a Simple Assessment appears incorrect, an objection will usually need to be raised with HMRC within 60 days of the notice date.[5]

The Simple Assessment payment deadline is not always simply “31 January 2027”. For 2025/26, a notice received before 31 October 2026 is generally payable by 31 January 2027. A notice received on or after 31 October 2026 is usually payable within three months of the notice date. The formal notice and current HMRC rules should be checked.[5]

5. If the bank reports interest, is Self Assessment still required?

Not necessarily. HMRC generally receives interest information from banks, but a bank reporting interest does not mean it has paid all of the individual's Income Tax liability.

Someone who is already required to complete Self Assessment will normally need to include the relevant savings interest in the return. HMRC also states that a person whose savings and investment income for a tax year exceeds £10,000 must report it through Self Assessment. Where bank interest is the only additional income, HMRC may instead collect tax through PAYE coding or Simple Assessment, depending on the circumstances.[6]

Frequently Asked Questions

Q: I earned only a few hundred pounds of interest. Must I pay extra tax?

Not necessarily. The result depends on the applicable PSA, other income, tax band and any other available allowances.[2]

Q: Does receiving a P800 mean HMRC thinks I evaded tax?

No. A P800 is a tax calculation. A normal year-end reconciliation can show either tax due or a repayment.[4]

Q: I paid the first assessment. Can I ignore a second one?

No. Check whether the later notice is an updated total assessment and make sure the earlier payment is credited before calculating the remaining balance.[1]

Receiving a notice about bank interest calls for a careful reconciliation of the tax year, interest figures, allowances and payments already made. Where several income sources, joint accounts or prior-year discrepancies are involved, professional advice can help prevent both underpayment and duplicate payment.

This article provides general tax information based on UK guidance available by 21 October 2026. It is not advice for an individual's circumstances.

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