Budget analysis – what does it mean for your money?

The Chancellor’s latest Budget statement generated plenty of headlines, everything from energy bills and import taxes, to buying your first home. (And yes, a jar of gherkins is apparently getting cheaper) 

But for those of us with cash savings, it’s worth considering what the Budget and subsequent policies or initiatives could mean for our investments, now and in the future.

We’ve rounded up the main details to help customers stay informed*.

Is the cash ISA allowance changing?

Savers under 65 had been bracing themselves for the annual cash ISA subscription limit to be cut to £12,000, which was first announced in November 2025 by former Chancellor Rachel Reeves and was due to take effect in April 2027.

These plans have now been cancelled, meaning the limit will remain at £20,000 for all savers regardless of their age.

The £20,000 limit is the maximum amount you can put into a cash ISA during each tax year and the interest you receive is tax free**. It’s a combined total across all your ISAs, not a separate allowance for every account you have or provider you use.

There was also reference in the Budget to a new ‘Starter ISA’ targeted at first time investors who may want to look beyond traditional cash savings products. No specific design features or timescales are available yet.

Is anything changing for savings held outside an ISA?

Tax rates on savings income are going to increase by four percentage points, although not everyone will necessarily feel the impact.

From 6 April 2027, tax rates will be 24% for basic rate taxpayers, 44% for higher rate taxpayers and 49% for those on the additional rate.

That said, you still have a Personal Savings Allowance. This is the amount of interest you can earn each tax year before tax becomes due and these annual allowances are unchanged, at up to £1,000 of savings interest for basic rate taxpayers and up to £500 for higher rate taxpayers.

Additional rate taxpayers do not receive a Personal Savings Allowance.

What this development does highlight is the importance of choosing the right savings account and putting your money in the most appropriate place.

Other considerations beyond tax include what interest rate is being offered, whether it’s fixed or variable, access to your money and other account terms such as notice periods when making withdrawals, so check the finer details carefully.

You should also regularly review your savings and how they’re arranged to ensure your chosen products still suit your needs.
If you’d like any support, our colleagues will be happy to discuss your goals, help you find the best approach and explain the various savings allowances available to you.

* This update provides general information, not personal financial or tax advice. If you are unsure how the rules apply to you, check HMRC guidance or speak to a qualified adviser.

** Interest earned on ISAs is tax free as long as the statutory conditions of the scheme are not breached. Tax treatment depends on your individual circumstances and may be subject to change in the future.