HMRC could soon send tax letter to anyone with this type of savings account

Customers of banks including , , , , and may be contacted by HMRC if they have a savings accounts which has been on a fixed rate of intesest for two or three years. These accounts pay a lump sum of interest at the end of the term, an amount which could breach the savers' .

If a saver is paying a basic rate tax on their income, they get a personal savings allowance of £1,000 while someone paying higher rate tax on their salary gets an allowance of £500 a year. Additional rate taxpayers do not have an allowance.

Although the interest has been earned over two or three years, HMRC includes it in the current tax year.

Paragon Bank estimates that 2.4 million fixed-term, non-ISA savings accounts will end in the next three months and a third of these, around 887,000, will generate enough interest to be taxed.

Laura Suter, director of personal finance at AJ Bell, said: "Many people won't realise that [fixed rate accounts] could leave them with a tax headache in the future.

"You are taxed on the interest on your savings when it is accessible by you."

"So if you pick a fixed-rate savings account that pays out all the interest at maturity, for tax purposes all of that interest will be counted in one tax year.

"This means that the interest from just one account could take you over your Personal Savings Allowance on its own."

Accounts where interest is paid out monthly or annually may be better options, Ms Suter said.

She added: "This means it is spread across different tax years.

"Or you can opt for a fixed-term ISA savings account, where you won't pay any tax on the interest."

If you have saved into an ISA, your interest is tax free, and you can put up to £20,000 a year into either a cash or stocks and shares (investrment) ISA during during each tax year.