Rachel Reeves has confirmed significant tax changes that will affect millions in the UK. Starting from April 2027, new taxes will apply to savings and rental income, among other adjustments.
Key impacts of the tax changes:
- The cash Isa limit will drop from £20,000 to £12,000 for individuals under 65.
- Income tax rates on savings and rental income will increase by 2 percentage points.
- Basic-rate taxpayers will pay 22% on interest or property income.
- Higher-rate taxpayers will face a 42% rate, while additional rate taxpayers will pay 47%.
- The threshold for Making Tax Digital will decrease from £50,000 to £30,000.
Additionally, vehicle owners will see new charges under the Vehicle Excise Duty (VED). A £410 charge applies to certain cars starting in April 2026. Electric vehicles will only incur a nominal fee of £10.
Vehicle Excise Duty details:
- Cars with CO2 emissions below 100g/km must pay £20 annually starting April 2026.
- Petrol and diesel cars emitting over 255g/km registered after April 1, 2026, will face costs of up to £5,690.
- Classic cars built before January 1, 1986, will no longer pay VED but must still be taxed.
Experts warn that in this higher-tax environment, how individuals structure their savings is crucial. Jason Hollands from Evelyn Partners emphasized that many landlords are reassessing their positions due to these changes. Clare Stinton noted that “the countdown is on” for taxpayers to prepare for these adjustments.
Uncertainties remain regarding how these changes will affect the broader economy. Kenneth Rowson criticized the VED changes as merely another tax on motorists. Further developments are expected as HM Revenue and Customs clarifies implementation details.
