Three tax changes coming under Rachel Reeves will affect everyone from savers to landlords and sole traders. The Labour Party chancellor’s shake-up will come into force in April 2027, impacting ISAs, savings income, and self-assessment requirements.
Cash ISA Changes
From April 2027, the total annual ISA allowance remains at £20,000, but the way you can use it changes for those under 65. You can put up to £12,000 in a cash ISA each tax year, with the remaining £8,000 available for a stocks and shares ISA. Alternatively, you can choose any combination as long as you do not exceed £12,000 in a cash ISA and your total across all ISAs stays within the £20,000 limit. For those aged 65 or over, these changes do not apply, and the full £20,000 allowance remains usable across all ISA types.
Tax on Savings and Rental Income
The government is increasing taxes on savings and property income to narrow the gap between tax on work and income from assets. From 6 April 2027, income tax rates on savings and rental income will rise by 2 percentage points. Jason Hollands of Evelyn Partners warns that in a higher-tax environment, structuring savings becomes even more important. Many landlords are reassessing their positions, with some considering transferring ownership between spouses or incorporating portfolios into company structures, though these decisions are complex and may lead some to sell up.
Making Tax Digital
Making Tax Digital has already begun with a £50,000 threshold for this tax year. However, from 6 April 2027, the threshold will drop to £30,000 for self-employment and property income earned in the 2025-26 tax year. This means more sole traders and landlords will need to comply with digital record-keeping requirements.
Hollands advises not to wait: “April 2027 may feel some way off, but when it comes to financial planning, a year is not a long time. The changes on the horizon are significant and, for many people, will require a rethink of strategies that may have been in place for many years. The sooner people start reviewing their plans, the more options they are likely to have.”
