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Martin Lewis has warned savers that they could face tax bills from HMRC with as little as £11,000 in their savings accounts this year.

That's because of the way the Personal Savings Allowance works and how it relates to your income.

Martin spoke about it on an episode of The Martin Lewis Show Live on ITV1 and ITVX on March 10, where he took viewers through various legal methods of avoiding tax by making the most of the allowances available each year.

He explained that those who earn less than £50,270 a year can earn £1,000 of interest on their savings outside of ISAs without paying tax on it. But for those earning above £50,270, the limit on savings interest is slashed to just £500 a year, which is an amount you can hit with just £11,000 in a top-paying savings account.

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Speaking to his live ITV audience, Martin said: "Next, we get the big one many of you will know about. The Personal Savings Allowance.

"This is the fact that a basic rate taxpayer, 20% taxpayer, can earn £1,000 a year of interest in any form of savings at all, without paying tax on it.

"Now the top savings accounts right now pay about 4.5% so you need about £22,000, just a little over £22,000 in the top savings account, before you earned over £1,000 interest. So if you've got less than that, you're not going to be paying tax on your savings interest because it's tax free. Because it's within your Personal Savings Allowance."

But that's for basic rate taxpayers. Those who earn more than £50,270 in a year get a much lower allowance.

Martin added: "Higher rate of taxpayers [get] £500 a year of interest they can make each year tax-free. It's about £11,000 saved at the top rate.

"If you're an additional rate taxpayer earning above £125,000, you don't get one of these."

Of course, this doesn't apply to any money in Cash ISAs, which are tax-free on the first £20,000 deposited in a single tax year (though this is being reduced to £12,000 for under-65s from April 2027).

Martin added: "And then, you get what we're talking about today. A Cash ISA, a savings account you don't pay tax on. You can put up to £20,000 a tax year in, as you know, and crucially, the interest earned in a Cash ISA does not count towards the Personal Allowance. Does not count towards the Starting Rate for Savings. Does not count towards the Personal Savings Allowance.

"It is totally separate from that. I should note Premium Bonds work roughly the same way but it's not an annual allowance it's a maximum £50,000 you can put in, in total."

The Martin Lewis Money Show Live, Tuesday March 10 episode is still available to watch via ITVX.