📢 Attention pensioners and savers! HMRC has cleared up some confusion regarding the tax rules that might affect your hard-earned money. Here’s the lowdown on what’s changing and how it affects you.
🧐 A concerned individual recently reached out to HMRC on social media, asking about tax on savings interest for pensioners. Here’s what you need to know: under current rules, if you’re a basic rate taxpayer, you can earn up to £1,000 in interest on your savings each year without paying tax. This amount drops to £500 for higher rate taxpayers and disappears entirely for those on the additional rate.
👉 If your savings are in a cash ISA, you’re in luck, as all interest is completely tax-free. The same goes for stocks and shares held within an ISA.
🚨 But here’s the kicker—things are set to change in April 2027. The tax rate on interest earnings is rising by two percentage points across the board. Basic rate taxpayers will see their rate jump to 22%, while higher rate taxpayers will be hit with 42%, and those on the additional rate will pay 47%.
💰 On top of that, ISA regulations are tightening. Currently, you have a £20,000 ISA allowance to split as you please between cash and stocks/shares. Come April 2027, you’ll need to allocate £8,000 specifically towards stocks and shares, leaving just £12,000 flexible. However, if you’re 65 or older, you luckily get to maintain your current £20,000 flexibility.
Stay informed and plan ahead to ensure your savings go as far as possible! 🏦💡