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Home » Savings tax raid to hit 3.8 million Britons as Budget shake-up could push bills up by £603
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Savings tax raid to hit 3.8 million Britons as Budget shake-up could push bills up by £603

By britishbulletin.com28 October 20262 Mins Read
Savings tax raid to hit 3.8 million Britons as Budget shake-up could push bills up by £603
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The thresholds are due to remain frozen until 2031. As wages rise, more workers could enter the higher-rate band even if their spending power has not increased.

Anyone moving from the basic to the higher-rate band would see their Personal Savings Allowance cut from £1,000 to £500 at the same time as the tax rate on their interest increased.

Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “The stealth tax of freezing income tax thresholds until 2031 means many consumers are being dragged into higher-rate tax bands, and with no signs of review, it means thresholds will have been in place for almost a decade.”

She warned that the Personal Savings Allowance “has not moved with the times” since its introduction around 10 years ago.

People building a deposit for a home could be among those affected if they hold substantial sums in ordinary savings accounts rather than ISAs.

Rachael Griffin, tax and financial planning expert at Quilter, said: “Three forces are now colliding for savers, which is relatively high interest rates, higher rates of tax on savings and a Personal Savings Allowance that remains stuck in time.”

Property income will also face the same rates from April 2027. Landlords will pay 24, 44 or 49 per cent, depending on their tax band.

Ms Suter warned that some landlords could respond by raising rents or selling properties, potentially reducing the supply of homes available to tenants.

Ms Griffin said: “The broader message from these changes is that where you hold your savings is becoming almost as important as the rate you earn on them.

“With frozen allowances and higher tax rates increasingly eating into returns, savers need to make sure they are using the tax-efficient options available to them.”

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