Rachel Reeves’ UK tax changes will hit savers, landlords and sole traders from April 2027, with the biggest shift falling on people aged 18 to 64 who use cash Isas. From 6 April 2027, under-65s will be capped at £12,000 in a cash Isa each tax year, while anyone 65 or over will still be able to put the full £20,000 allowance into cash.
If someone under 65 pays in more than £12,000, the extra money will have to go into a stocks and shares Isa. The wider Isa allowance stays at £20,000 a year and can still be split across multiple accounts, but the final year to put the full amount into a cash Isa for people aged 18 to 64 is now 2026-27. Money saved into an Isa will remain tax free and can still be moved to new Isa deals if the accounts accept transfers in.
The changes matter because the same date will also bring a 2 percentage point rise in income tax rates on savings and rental income. After the change, basic-rate taxpayers will pay 22% on interest or property income, higher-rate taxpayers will pay 42%, and additional rate taxpayers will pay 47% after allowances have been used. The personal savings allowance will stay at £1,000 for basic-rate taxpayers, £500 for higher-rate taxpayers and up to £5,000 for people earning less than £17,570 a year.
Jason Hollands said April 2027 may feel some way off, but a year is not a long time when it comes to financial planning. He said the changes on the horizon are significant and will force many people to rethink strategies that may have been in place for years, adding that the key message is not to wait because the sooner people review their plans, the more options they are likely to have.
Clare Stinton said this is a bit of a use it or lose it moment for cash Isas, adding that the countdown is on. Her advice was simple: set up a monthly direct debit into an Isa, which she described as a straightforward and non-taxable move that can make a big difference. That urgency is the point of the policy. Millions of people will be affected by a wider package of savings, investment and tax changes designed to narrow the gap between tax paid on work and income from assets, and the next 12 months are the last clear window for anyone aged 18 to 64 who wants the full cash Isa allowance.