Budget 2026: how to beat the new savings tax rates
John Healey’s budget offered a ‘sting in the tail’ for savers by raising tax rates but there are ways to ease the pain Savers were both winners and losers in Wednesday’s budget.
By The Guardian
Savers face higher tax rates on savings and property income from 6 April 2027 after Chancellor John Healey announced an additional two percentage-point increase.
The new rates will be 24% for basic-rate taxpayers, 44% for higher-rate taxpayers and 49% for additional-rate taxpayers. The changes apply across the UK and will take effect in the 2027-28 tax year.
The increase comes on top of rises previously announced by Rachel Reeves. Jason Hollands, managing director at wealth manager Evelyn Partners, described the latest measures as a “sting in the tail” for savers.
The Budget also confirmed that the planned reduction in the cash Isa allowance will not go ahead. The annual tax-free cash Isa limit will remain at £20,000 for people of all ages.
The Government said 88% of people would pay no more tax on their savings. However, people with larger balances or higher taxable savings income may face increased bills once the new rates begin.
Using tax-free savings allowances, including cash Isas, will be one way for savers to reduce the amount of interest exposed to income tax. The £20,000 annual cash Isa limit remains available from the 2027-28 tax year.
The new savings and property income rates are due to apply from 6 April 2027.