New rate of tax on interest from April 2027

Heytheremrblue

https://forums.moneysavingexpert.com/discussion/comment/81942500#Comment_81942500

Thanks for your help

subjecttocontract

Most of us have the chance of putting an extra £24K-£40K in ISAs by the start of the 27/28 tax year so the effect will be somewhat cushioned.

jak22

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

I thought I'd posted that's it's a 10% increase in tax paid on interest rather than a 10% increase to everyone's overall tax. A tax rate rise is in addition to threshold freezes, and may not be negligible to all.

clivep

'The government is raising rates of tax on property, savings and dividend income to ensure income from assets is taxed more fairly. Those with property, savings or dividend income pay less tax than those whose income comes from employment or self-employment as they do not pay National Insurance. The government is increasing taxes on property, savings and dividend income to help to narrow this gap between tax paid on work and tax paid on income from assets'.

Most people stop paying National Insurance contributions after reaching State Pension age. To be treated fairly, surely this means those over state pension age should not have the tax rates increased..

mills112

https://forums.moneysavingexpert.com/discussion/comment/81948955#Comment_81948955

i think it is more about increasing the tax to those who can afford to pay it. if you have savings then you obviously have wealth and similarly property. dividend tax i agree with as that was quite low, but tax on rental income is going to be quite high, as well as savings interest. old people are going to be affected the most as they will be the generation with most savings, the OAPs, a lot of whom rely on savings interest as an income.

you don't pay less tax if you have savings as those savings would most likely have come from your employment income anyway, which has already been taxed. you don't pay NI on savings interest or rental income because those earnings are not deemed to be "relevant earnings" for pension contributions and tax relief, and NI is supposed to be for the state pension contribution.

mills112

https://forums.moneysavingexpert.com/discussion/comment/81948876#Comment_81948876

where is 24k - 40k come from? the ISA limit is likely to be reduced soon as well then we all be stuffed.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/81948998#Comment_81948998

I do not want to get too political but in these discussions about savings interest, it is useful to put it into some context.

The UK tax regime for savings interest is very generous by international standards. Includes ISA's, personal savings allowances and starter savings rates + your personal tax allowance if you have no other taxable income.

Your average Irishman or German would be ecstatic to even enjoy a quarter of our interest tax allowances.

subjecttocontract

https://forums.moneysavingexpert.com/discussion/comment/81949002#Comment_81949002

If you are under 65 you get £12K isa allowance this April & next = £24k

If you are over 65 you get £20K isa allowance this April & next = £40k

The money would come from taxable savings.

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/81949059#Comment_81949059

The differentiation between over- and under-65s only comes into play next April, i.e. 2027, so everyone still has the £20K allowance for 2026/27.

subjecttocontract

Thanks for correcting me on that.

It does mean that there is a potential for up to £40K in tax free ISA allowance for everyone before the increased savings tax comes in. So, a softer landing is available for many of us.