Tax for savers and investors
Tax for savers and investors
From 6 April 2027 savings interest above your allowances is taxed at 24%, 44% or 49%. We help you use your ISA, allowances and family set-up so more of your interest, dividends and gains stay with you.
Tax on savings interest is going up
| Band (on taxable savings income) | 2026/27 | From 6 April 2027 |
|---|---|---|
| Basic rate | 20% | 24% |
| Higher rate | 40% | 44% |
| Additional rate | 45% | 49% |
The allowances that keep most interest tax-free are unchanged: the personal savings allowance of £1,000 for basic-rate taxpayers and £500 for higher-rate taxpayers (nil at the additional rate), and the £5,000 starting rate for savings for people with low earnings. The new rates bite on interest above those allowances.
What it costs
- A basic-rate taxpayer with £100,000 earning 4% gets £4,000 of interest. After the £1,000 allowance, £3,000 is taxable: £600 now, £720 from April 2027.
- A higher-rate taxpayer with £60,000 earning 4% gets £2,400. After the £500 allowance, £1,900 is taxable: £760 now, £836 from April 2027.
How your other investment income is taxed
| Rates | Tax-free allowance | |
|---|---|---|
| Savings interest | 20% / 40% / 45% (24% / 44% / 49% from April 2027) | £1,000 / £500 personal savings allowance; £5,000 starting rate |
| Dividends | 10.75% / 35.75% / 39.35% | £500 dividend allowance |
| Capital gains | 18% / 24% | £3,000 annual exempt amount |
| ISAs | Tax-free | £20,000 a year; the planned cash ISA cut has been dropped |
Savings and dividend rates apply across the UK and use the UK tax bands, after the £12,570 personal allowance.
Ways to keep more of your investment income
Fill your ISA first
Interest, dividends and gains inside an ISA are tax-free, and the full £20,000 allowance stays. Moving savings into an ISA each April is the simplest protection against the new rates.
Use both spouses’ allowances
Savings held by the spouse or civil partner who pays the lower rate, or has unused allowances, can be taxed at 0% or 24% instead of 44%. Transfers between spouses are free of capital gains tax.
Pension contributions
Contributions get tax relief at your top rate and can bring you back into a lower band, which also restores a bigger personal savings allowance.
Investment structures
For larger portfolios, a family investment company or EIS and SEIS investments can make sense. We look at the whole picture, including inheritance tax, before recommending either.
What we do for savers and investors
- Self-assessment returns with interest, dividends and gains
- Capital gains computations on shares, funds and crypto
- Reviews of who in the family should hold what
- Personal savings allowance and starting-rate checks
- Family investment companies
- EIS / SEIS relief claims
- Inheritance tax and estate planning alongside your investments
We give tax advice, not investment advice. We are happy to work alongside your financial adviser.
Common questions
When does the higher tax on savings start?
Is my personal savings allowance changing?
Does the change affect dividends?
Has the cash ISA allowance been cut?
Should I move savings into my spouse’s name?
Worried about the new savings rates?
Book a free 30-minute call. We will look at where your savings and investments sit and tell you straight whether there is tax to save.