Savings Interest Tax rates 2027

---

From April 2027, the tax rates on savings interest will increase. The new rates for the 2027 to 2028 tax year will be:

• 22% for basic rate taxpayers (Savings Basic Rate)
• 42% for higher rate taxpayers (Savings Higher Rate)
• 47% for additional rate taxpayers (Savings Additional Rate)

These new rates apply across the whole of the UK.

---

What does this mean for you?

While the tax rates are going up, the rules on when you have to pay tax remain largely the same. Most savers will still not pay any tax on their interest because of tax-free allowances.

Here is a simple guide to how it works.

1. Most people don’t pay tax on savings

Over 90% of UK taxpayers do not pay any tax on their savings interest. You only pay tax if the interest you earn is higher than your tax-free allowances.

2. The Personal Savings Allowance (PSA)

Most people have a “Personal Savings Allowance.” This is an amount of interest you can earn each year without paying a penny in tax. This allowance is on top of your normal salary allowance.

• Basic Rate Taxpayers: Can earn £1,000 of interest tax-free.
• Higher Rate Taxpayers: Can earn £500 of interest tax-free.
• Additional Rate Taxpayers: Do not get a Personal Savings Allowance.

If you earn more interest than your allowance, you only pay tax on the amount above that limit.

---

---

3. The Starting Rate for Savings (For lower earners)

If you earn less than £17,570 a year from your wages or pension, you might get extra help.

The Government provides a Starting Rate for Savings. This allows you to earn up to £5,000 in interest completely tax-free. This is in addition to your Personal Allowance.

4. ISAs remain tax-free

Any savings you hold in an Individual Savings Account (ISA) are completely safe from these tax rises.

• Interest earned in an ISA is never taxed.
• It does not count towards your Personal Savings Allowance.

Summary

If you earn interest on your savings, you will only face the new 2027 tax rates (22%, 42%, or 47%) if you earn more interest than your tax-free allowances cover. For the vast majority of savers, no tax will be due.

---