Tax on savings interest: the allowances, and the April 2027 rise
Higher interest rates have pushed many savers past their allowances for the first time. From April 2027, tax on savings interest rises by four points.
Interest on savings outside an ISA is taxable, but most people pay none, thanks to two allowances. The Personal Savings Allowance covers £1,000 of interest for basic-rate taxpayers and £500 for higher-rate taxpayers; additional-rate taxpayers get none. The starting rate for savings can cover up to £5,000 more if your other income is low.
Show the data
| Basic, 2026/27 | 20% |
|---|---|
| Basic, from April 2027 | 24% |
| Higher, 2026/27 | 40% |
| Higher, from April 2027 | 44% |
An example
HMRC’s example: a basic-rate taxpayer with £1,300 of interest pays no tax on the first £1,000 and 20% on the remaining £300, so £60. From April 2027, the same interest would cost £72.
What you can do
- Use your ISA allowance first: interest inside an ISA is tax-free and does not use your allowances.
- Spread savings between spouses so both sets of allowances are used.
- Watch fixed-rate bonds that pay all their interest at maturity, which can land in one tax year.
More on
This insight is general information, not advice for your circumstances. Talk to us before acting on it.