New rate of tax on interest from April 2027

mills112

https://forums.moneysavingexpert.com/discussion/comment/81949042#Comment_81949042

but we live in the UK and there are lots of other countries where the tax is a lot less than the UK for these.

mills112

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

but that is over two years. the tax is annual. i had forgotten about the ISA being reduced to 12k, eeekkk….

masonic

https://forums.moneysavingexpert.com/discussion/comment/81948913#Comment_81948913

You did, and even that is incorrect. Some examples:

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

I also included some bigger picture examples to demonstrate why some may consider the impact negligible, which was the concept you seemed to be struggling to comprehend. It won't be negligible to all, but it will be to most.

masonic

https://forums.moneysavingexpert.com/discussion/comment/81949217#Comment_81949217

You are of course welcome to emigrate to one of those and enjoy everything it has to offer. The full package may not be quite as attractive.

Nevertheless, in the UK, with good planning, you can avoid paying tax on interest derived from a very large amount of capital. Paying a lower rate of tax on a higher proportion of your savings may not be better overall.

friolento

https://forums.moneysavingexpert.com/discussion/comment/81949068#Comment_81949068

The total annual ISA allowance stays £20k for everyone, regardless of age. The change from next April is for cash ISA allowance only.

In other words, ISA allowance from 6 April 2027 is:

Under 65: £20k, of which max £12k in cash ISAs

65 and over: £20k, any of it in cash or other ISAs

friolento

https://forums.moneysavingexpert.com/discussion/comment/81949219#Comment_81949219

You will still have a £20k annual ISA allowance. The new £12k limit for under 65s is for cash ISAs only. You can still use the other £8k for other types of ISAs

subjecttocontract

I already pay a lot of tax because in spite of already having a large amount in ISAs into which I have contributed every year for a long time, I still have some taxable savings. I'll just carry on placing as much as I can into new ISAs so that the extra 2p in the pound tax will be barely noticable. I don't understand why everyone else can't put their money in ISAs to avoid the extra tax.

masonic

https://forums.moneysavingexpert.com/discussion/comment/81949493#Comment_81949493

There are a few cases where people come into a lot of money suddenly (such as inheritance) or temporarily (such as moving house), but yes, with good planning those in a normal financial situation have options to avoid paying this tax. Where one has a large sum that is being invested for the long term, interest-bearing assets may not be the most appropriate place to put it.

subjecttocontract

Because of the recent introduction of flexible ISAs they can almost be used to park money that might normally be held in a regular easy access account.

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/81949453#Comment_81949453

True - the context of this thread is savings and cash ISAs but no harm in clarifying the position for non-cash ISAs…