Tax on savings interest rises to 24% from April 2027: Budget 2026 explained
Budget 2026 says the income tax rates on savings income will be 24% (basic), 44% (higher) and 49% (additional) from 6 April 2027, across the UK. HMRC's tables show they are 20%, 40% and 45% in 2026/27. The Personal Savings Allowance stays at £1,000 and £500.
What happened
In Budget 2026 on 28 October, HM Treasury announced that income tax on savings income will be charged at 24% (basic), 44% (higher) and 49% (additional) from 6 April 2027. The change applies across the UK and is to be legislated in Finance Bill 2026-27. It is an announcement, not yet law.
The savings basic rate will be 24%, the savings higher rate will be 44%, and the savings additional rate will be 49%. These rates will apply across the UK. This will be legislated for in Finance Bill 2026-27 and take effect from 6 April 2027.
Status: Announced by the government
HM Treasury (GOV.UK) — Budget 2026 (HTML), 28 October 2026
HMRC's savings rates table gives, for 2026 to 2027 and then 2027 to 2028: savings basic rate 20% then 24%, savings higher rate 40% then 44%, savings additional rate 45% then 49%, and starting rate for savings 0% in both years.
HM Revenue & Customs (GOV.UK) — Budget 2026: overview of tax legislation and rates (OOTLAR), Annex A: rates and allowances, 28 October 2026
In both 2026 to 2027 and 2027 to 2028, HMRC's tables keep the Personal Savings Allowance at £1,000 for basic rate taxpayers and £500 for higher rate taxpayers, the starting rate limit for savings at £5,000 and the ISA subscription limit at £20,000.
HM Revenue & Customs (GOV.UK) — Budget 2026: overview of tax legislation and rates (OOTLAR), Annex A: rates and allowances, 28 October 2026
HM Treasury says 84% of income tax payers will be unaffected by these changes.
HM Treasury (GOV.UK) — Budget 2026 (HTML), 28 October 2026
HM Treasury says Budget 2025 had already raised the rates on savings and property income by two percentage points from April 2027, and this Budget adds a further two percentage points from that date.
HM Treasury (GOV.UK) — Budget 2026 (HTML), 28 October 2026
HM Treasury says a basic rate taxpayer would need over £25,000 in savings, on top of any ISA savings, before paying tax, and someone also eligible for the starting rate for savings could hold up to £150,000 outside ISAs without paying tax.
HM Treasury (GOV.UK) — Budget 2026 (HTML), 28 October 2026
What is established, and what is not
- The savings rates are 20%, 40% and 45% in 2026/27 and are announced as 24%, 44% and 49% from 6 April 2027.
- The starting rate for savings stays at 0%.
- The Personal Savings Allowance stays at £1,000 and £500, and the ISA subscription limit at £20,000.
- The new rates are to apply across the UK, so in England, Scotland, Wales and Northern Ireland alike.
- The Finance Bill 2026-27 clauses that will legislate the new savings rates, which have not yet been published.
- Any HMRC guidance on how the new rates apply to interest paid in the 2027/28 tax year on accounts opened earlier.
Nothing in the right-hand column is established. It is listed so that what is confirmed cannot be read as covering it.
What it means
HMRC's rates tables, published with the Budget, show the savings rates are 20%, 40% and 45% in 2026/27. They rise to 24%, 44% and 49% in 2027/28. The same tables leave the Personal Savings Allowance at £1,000 (basic rate taxpayers) and £500 (higher rate taxpayers), the 0% starting rate for savings and its £5,000 limit, and the £20,000 ISA subscription limit unchanged. Interest that stays within those allowances, or is held in an ISA, is not affected. Nothing changes before 6 April 2027.
Who is affected
- Savers whose interest is more than their Personal Savings Allowance and is not in an ISA
- Higher and additional rate taxpayers with savings outside ISAs
- Not most taxpayers: HM Treasury says 84% of income tax payers will be unaffected
UKCalc's interpretation
The section below is UKCalc's analysis. It is separated from the facts above deliberately: it is arguable, and the facts are not.
Only interest above a saver's tax-free allowances, and outside an ISA, is taxed at the new rates. The allowances themselves do not change in HMRC's 2027 to 2028 tables, so a saver whose interest stays within them sees no change.
UKCalc's reading of the evidence above, not a statement by any source.
Compared with the rates savers pay in 2026/27, each savings rate is higher from April 2027 by the Budget 2025 increase and this Budget's increase together.
UKCalc's reading of the evidence above, not a statement by any source.
What happens next
The rates must be legislated in Finance Bill 2026-27 before they take effect on 6 April 2027. UKCalc will update this report when the legislation is published.
Questions this answers
- What is the tax rate on savings interest from April 2027?
- What is the tax rate on savings interest now?
- Is the Personal Savings Allowance changing?
- Does the savings tax rise apply in Scotland and Wales?
- When does the savings tax change start?
Sources
- HM Treasury (GOV.UK) — Budget 2026 (HTML) · 28 October 2026
- HM Revenue & Customs (GOV.UK) — Budget 2026: overview of tax legislation and rates (OOTLAR), Annex A: rates and allowances · 28 October 2026
Statutory figures belong to the body that publishes them. UKCalc compiles and verifies them, and any calculation built on top is UKCalc's own — see the governed rates reference.