New rate of tax on interest from April 2027

aroominyork

https://forums.moneysavingexpert.com/discussion/comment/81942855#Comment_81942855

Forgot about what?

mills112

https://forums.moneysavingexpert.com/discussion/comment/81942664#Comment_81942664

a few hundred quid extra and you say it isn't much of a difference??? 😯

subjecttocontract

https://forums.moneysavingexpert.com/discussion/comment/81942909#Comment_81942909

Exactly, I did say some of us, not all of us. This forum includes some who pay a lot of tax so a few hundred at most won't make a big difference. Even if it does make a difference, its going to happen anyway so plan accordingly.

booneruk

Putting a number on it is a fool's errand, everyone's circumstances are different

For those who exceed their PSA, they will be paying an extra 2 percentage points in tax on that interest. This could be pennies, pounds or hundreds.

If it's hundreds, there's not really much to moan about. Keep putting the money into our very generous ISAs, I'm sure those affected will survive.

jak22

It's a 10% increase in tax paid on interest. On a money savings forum I'm surprised to learn that 'a few hundred' won't 'make a difference' (a difference to what?) or that commenting on it is just moaning.

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/81943007#Comment_81943007

Surely commenting negatively on something is just moaning, unless accompanied by action (whether that's making more use of tax wrappers, lobbying MPs, starting/signing petitions, etc)?

masonic

https://forums.moneysavingexpert.com/discussion/comment/81943007#Comment_81943007

The percentage increase in tax paid due to this change in isolation depends on your marginal rate of tax and amount of interest earned. Some examples:

• Non-taxpayer or Basic rate and <£1,000 in interest - no increase in tax paid (the majority of people fit here)
• Basic rate taxpayer with >£1,000 in interest - 10% increase in tax paid
• Higher rate taxpayer and <£500 in interest - no increase in tax paid
• Higher rate taxpayer with >£500 in interest - 5% increase in tax paid
• Additional rate taxpayer with any interest - 4.4% increase in tax paid

The increase in effective tax rate on someone's savings interest, taking into account PSA and the rate change, is even more variable due to their circumstances. If they are just above the PSA, then the change will be near 0% for them, whereas if they receive several thousand in interest or have no PSA then it will be closer to or at the above percentages.

If you look at it in the context of all tax paid, some pay tens of thousands in tax per year, of which tax on interest is a very small part. For them, the overall increase in the tax taken from them due to this change alone could well be negligible. The ongoing freeze to tax thresholds will be costing such a person much more.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/81943079#Comment_81943079

A Govt figure was mentioned that 90% of people will not be affected. Not sure if that was 90% of savers, or included the significant % of people with no savings at all.

nottsphil

https://forums.moneysavingexpert.com/discussion/comment/81942315#Comment_81942315

That's quite a rude response to somebody who is helping you (and they were doing precisely that).

As for the first sentence, I could have agreed with one or two of its contents had you argued eg "but most of the interest payable in 2026-27 will have actually been earned over this tax year".

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/81943386#Comment_81943386

The quote (from the budget speech) was posted upthread earlier today: "90% of taxpayers will still pay no tax at all on their savings", which is as loosely-defined as you'd expect from a politician, although there'll presumably be some statistical backup somewhere…