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Tax on savings interest rises from April 2027
Interest above your tax-free allowances will be taxed at 22%, 42% or 47% from 6 April 2027.
The income tax rates on savings income go up by 2 percentage points from 6 April 2027, under the Finance Act 2026.
The new savings rates
- Savings basic rate: 22% (currently 20%)
- Savings higher rate: 42% (currently 40%)
- Savings additional rate: 47% (currently 45%)
Who is affected
Anyone whose savings interest is more than their tax-free allowances. Interest earned inside an ISA stays tax-free.
Points to consider
- Using your ISA allowance each year shelters interest from tax — but note the cash ISA limit is falling to £12,000 for under-65s from April 2027
- Spouses and civil partners can sometimes share savings so both use their allowances
- Company directors with cash in the business should think about the best way to hold or extract it
If you have significant savings, it's worth reviewing them before April 2027.
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