From April 2027, the tax rates that apply to savings interest will increase slightly. There are also a number of changes being introduced to ISAs, for those aged under 65. Investors and savers may wish to review their existing ISA and savings arrangements ahead of these changes taking effect.
What is changing
For the 2027/28 tax year, the tax rates on savings interest will increase as follows:
• From 20% to 22% for basic rate taxpayers.
• From 40% to 42% for higher rate taxpayers.
• From 45% to 47% for additional rate taxpayers.
The amount that can be added to a cash ISA in a single tax year will reduce from £20,000 to £12,000, for those aged under 65.
It will no longer be possible to transfer from a stocks and shares ISA to a cash ISA, for those aged under 65.
Interest paid on cash held in a stocks and shares ISA (for example to cover fees or awaiting investment) will be taxed at a flat rate of 22%.
What is not changing
For the 2027/28 tax year, the personal savings allowances will remain as follows:
• £1,000 for a basic rate taxpayer.
• £500 for a higher rate taxpayer.
• £0 for an additional rate taxpayer.
It will still be possible to transfer from a cash ISA to a stocks and shares ISA.
The overall ISA allowance will remain at £20,000 – meaning for those aged under 65, £12,000 could be added to a cash ISA with £8,000 added to a stocks and shares ISA.
The starting rate band for savings will remain at £5,000 – for those with savings interest above £1,000 but total income below £18,570.
This article is for information only and should not be construed as advice or a recommendation. You should always seek independent financial advice prior to taking any action.
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