Cash ISAs and savings tax: what changes in April 2027
Facts checked 30 October 2026
At Budget 2026 on 28 October 2026 the government changed both of the April 2027 savings measures it announced a year earlier. Tax on savings interest will rise further than planned, and the cash ISA limit will stay at £20,000.
Tax on savings interest
Interest outside an ISA is taxed above your personal savings allowance: £1,000 a year for basic-rate taxpayers, £500 for higher-rate and nothing for additional-rate. The savings rates are 20%, 40% and 45% in 2026/27. From 6 April 2027 they become 24%, 44% and 49%, replacing the 22%, 42% and 47% announced at Budget 2025. The new rates apply across the UK, including to Scottish taxpayers, and still need to pass in the Finance Bill.
Worked example: £50,000 at 4.50% earns 50,000 × 0.045 = £2,250. A basic-rate taxpayer pays tax on £2,250 − £1,000 = £1,250: £250 at 20% in 2026/27, £300 at 24% from April 2027.
Work out the tax on your own interest, line by line, including the starting rate for savings, the personal allowance taper and Scottish income tax.
Interest of £2,250.00 a year, less a personal savings allowance of £1,000.00, leaves £1,250.00 taxable. Tax at 20% in 2026/27: £250.00. At 24% from April 2027: £300.00.
A simple illustration: it ignores the starting rate for savings and the personal allowance taper. The full savings tax calculator includes them. 2027/28 rates were announced at Budget 2026 and still need to pass in the Finance Bill. Interest in a cash ISA is tax-free.
The cash ISA limit
- The ISA allowance stays at £20,000 a year, and all of it can go into cash ISAs in 2026/27.
- A cut to £12,000 a year in cash ISAs for under-65s from 6 April 2027 was announced at Budget 2025 and set in regulations in 2026. At Budget 2026 the government said it will keep the cash ISA limit at £20,000 for all savers over 18 from April 2027, with new regulations to be laid in November 2026.
- Money already in cash ISAs stays tax-free, and you can still transfer between cash ISAs.
What to check
- How much interest your savings outside ISAs will earn in a year at today's rates.
- Whether you have used this year's ISA allowance. Compare cash ISA rates.
- To move an existing cash ISA, use a transfer: see how to switch safely.
Sources
- GOV.UK: Budget 2026 overview of tax legislation and rates (savings rates 1.1, cash ISA limit 2.5)
- GOV.UK: Budget 2026 rates and allowances (Annex A)
- GOV.UK: Tax on savings interest, how much is tax free
- GOV.UK: reduction in the cash ISA limit (September 2026, since reversed)
This guide explains how things work. It isn't personal advice; if you're unsure what suits you, speak to a regulated financial adviser.