Rachel Reeves has delivered two Autumn Budgets with real consequences for savers: October 2024, which raised Capital Gains Tax and employer National Insurance and brought pensions into inheritance tax, and November 2025, which cut the Cash ISA limit for under-65s from April 2027 and raised tax rates on savings, dividend and property income. This guide sets out what each one changed and what it means for your savings in the 2026/27 tax year and beyond.
October 2024 Budget: the changes for savers
The first Budget focused on investment gains, employers and estates. The main measures that still apply:
- Capital Gains Tax rates on shares and most other assets rose from 10% and 20% to 18% and 24% from 30 October 2024, matching the rates already charged on residential property. The annual exempt amount stays at £3,000
- Employer National Insurance rose to 15% from April 2025, with the threshold cut to £5,000 a year. It does not come off your payslip, but it may squeeze pay rises
- Unused pension pots and death benefits will count towards inheritance tax from 6 April 2027
- The inheritance tax nil-rate band stays frozen at £325,000, with the £175,000 residence nil-rate band, pulling more estates into the tax as prices rise
November 2025 Budget: the changes for savers
The second Budget hit savings income and ISAs more directly:
- From 6 April 2027, under-65s can put no more than £12,000 a year into Cash ISAs. The overall ISA allowance stays at £20,000, so the rest can go into Stocks and Shares or other ISAs. Savers aged 65 and over keep a £20,000 cash limit
- From 6 April 2027, tax on savings interest above your allowances rises by 2 percentage points, to 22%, 42% and 47%. Property income rates rise by the same amount
- From 6 April 2026, dividend tax rose to 10.75% (basic rate) and 35.75% (higher rate); the additional rate stays at 39.35% and the dividend allowance is £500
- Income tax thresholds, including the £12,570 Personal Allowance, stay frozen until April 2031
- From 6 April 2029, only the first £2,000 a year of pension contributions made through salary sacrifice will be free of National Insurance
- Help to Save was made permanent
How ISA savers are affected
ISAs are still the simplest way to protect savings from tax, and they become more valuable as the savings tax rates rise in 2027. The £20,000 allowance has not increased since 2017, so inflation has reduced its real value.
The biggest practical change is the Cash ISA limit. In the 2026/27 tax year (to 5 April 2027) you can still put the full £20,000 into Cash ISAs. From 6 April 2027, under-65s who want to shelter more than £12,000 a year will need to use a Stocks and Shares ISA or another type for the rest. Money already in Cash ISAs stays tax-free.
The Lifetime ISA still offers a 25% bonus on up to £4,000 a year, but the £450,000 property price cap rules out many homes in London and parts of the South East. The government has consulted on a replacement First Time Buyer ISA; no launch date has been confirmed.
- If you are under 65 and keep large cash savings, consider using your full Cash ISA allowance before 5 April 2027
- Compare Cash ISA rates regularly, as providers change them often
- If you are 18 to 39 and saving for a first home within the price cap, the Lifetime ISA bonus is still valuable
- Stocks and Shares ISAs may suit longer-term savers willing to accept market risk
Pension changes you should know about
Pensions remain one of the most tax-efficient ways to save. The annual allowance stays at £60,000, and the lifetime allowance was abolished in April 2024. The big shift is inheritance tax: from April 2027, unused pension funds will count towards your estate, which changes how many families plan to pass on wealth.
For most working-age savers, the priority is unchanged: make the most of any employer matching and use salary sacrifice where it is offered. The new £2,000 National Insurance cap on salary-sacrificed pension contributions does not start until April 2029.
- Check whether your employer offers salary sacrifice, which saves income tax and National Insurance
- If you are self-employed, consider a personal pension or SIPP and make regular contributions
- Review your pension investments every year to make sure they match your risk tolerance and time horizon
Practical steps to protect your savings
With tax thresholds frozen and savings tax rates rising in 2027, being proactive pays. Review where your savings sit: are you using your ISA allowance, is your emergency fund earning a competitive rate, and are you paying more interest on debts than you earn on savings?
- Move cash sitting in low-interest current accounts to competitive savings or ISA products
- Build a 3-6 month emergency fund before focusing on longer-term investments
- Pay off high-interest debt first, as credit card APRs of 20%+ outweigh savings returns
- Set up automatic transfers on payday so saving happens before spending
- If saving regularly is the hard part, SYM gives you a small daily amount to put aside and a streak to keep you going
Frequently asked questions
Has the ISA allowance changed?
Will I pay more tax on my savings interest?
How does the Capital Gains Tax increase affect me?
Should I change my savings strategy because of these Budgets?
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