In the 2026 budget statement, Chancellor John Healey surprised some observers by reversing a previously proposed reduction in the cash ISA limit for under‑65 savers, while simultaneously announcing an increase in tax charges on savings and property income.
The changes build on a measure first unveiled by Healey’s predecessor, Rachel Reeves, which would raise the income tax rates that apply to savings and landlord income from April 2027. Healey extended that approach by adding an extra two percentage points to each of those rates, a move that financial firms warned would hit savers and buy‑to‑let landlords.
"A sting in the tail," said Jason Hollands, managing director at wealth manager Evelyn Partners, reflecting the view among some in the financial services industry that the higher rates will be an unwelcome surprise for households that had benefited from earlier announcements in the budget.
Savers were described as both winners and losers in the budget: the abandonment of the cash ISA cut will be welcomed by many account holders, but the higher taxation on interest and rental income will reduce net returns for others. The government did not provide further detail in the budget statement on how the additional two percentage points will be implemented beyond referencing the earlier timetable for upcoming tax changes.
The measures are likely to prompt households and property investors to reassess their income and savings arrangements, and will be watched closely by advisers and industry groups as further guidance and technical details emerge. The chancellor’s package illustrates the trade‑offs faced by the Treasury as it seeks to raise revenue while avoiding immediate reductions in popular tax‑favoured allowances.