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UK Budget 2026: What Has Changed for Savers?
by
iFAST Global Bank
The UK Autumn Budget was announced on 28 October 2026, introducing several updates to savings, Individual Savings Accounts (ISAs) and support for first-time homebuyers.
Some previously planned restrictions have been cancelled, while changes to the tax on savings interest will take effect from April 2027.
Here is a simple breakdown of what has changed, who may be affected and when the new rules will apply.
1. Cash ISA: The £20,000 annual limit stays
What was planned before?
Under the Autumn Budget 2025 proposals, the annual Cash ISA contribution limit was due to fall from £20,000 to £12,000 for savers under 65 from 6 April 2027. Those aged 65 and over would have retained the £20,000 limit.
Note: Cash ISAs are only available to UK residents aged 18 or over with a valid UK National Insurance Number (NINO). Eligibility criteria and terms apply.
What has changed?
The government has cancelled the planned reduction.
From 6 April 2027, eligible savers aged 18 and over will continue to be able to contribute up to £20,000 annually to a Cash ISA, subject to the overall ISA allowance.
The total annual ISA allowance also remains £20,000, shared across relevant ISA types. This means savers cannot contribute £20,000 to a Cash ISA and another £20,000 to a Stocks and Shares ISA in the same tax year.
2. Tax on savings interest: Rates will rise from April 2027
Will all savings interest be taxed?
No. Existing tax-free allowances remain.
The Personal Savings Allowance will continue to be:
- £1,000 per tax year for basic-rate taxpayers.
- £500 for higher-rate taxpayers.
- £0 for additional-rate taxpayers.
Interest earned within an eligible ISA remains exempt from UK Income Tax.
Example
A basic-rate taxpayer earning £1,300 in taxable savings interest, with a £1,000 Personal Savings Allowance, would have £300 of taxable interest.
- At the current 20% rate: £60 tax.
- At the new 24% rate: £72 tax.
This means an additional £12 in tax, assuming the same income, allowance and circumstances.
3. Stocks and Shares ISAs: Planned restrictions cancelled
What was planned before?
Alongside the proposed Cash ISA reduction, the government had introduced anti-circumvention rules intended to prevent savers from bypassing the lower cash limit.
These included a planned 22% flat-rate charge on interest earned from cash held within non-cash ISAs, including Stocks and Shares ISAs, together with certain restrictions on ISA transfers and money market funds.
What has changed?
The government has confirmed that these planned restrictions will not take effect from April 2027.
The annual overall ISA allowance remains £20,000.
The government will also explore a possible new incentive for people investing in a Stocks and Shares ISA for the first time. However, the incentive's design, eligibility requirements and launch date have not yet been confirmed.
4. Lifetime ISA: Lower withdrawal charge for certain home purchases
What was the previous rule?
A Lifetime ISA (LISA) offers a 25% government bonus on eligible contributions, up to the relevant limits.
Note that a Lifetime ISA can only be opened and contributed to by UK residents, though your account can stay open if you later move abroad.
Withdrawals for a qualifying first-home purchase are normally free of the government withdrawal charge if the home costs no more than £450,000 and the other conditions are met.
Previously, a first-time buyer purchasing a property above £450,000 faced a 25% withdrawal charge.
What has changed?
From 29 October 2026, that charge has been reduced from 25% to 20% for first-time home purchases above £450,000 that otherwise satisfy the qualifying requirements.
The £450,000 property price threshold itself has not increased. Other unauthorised withdrawals continue to attract a 25% charge.
Example
For a Lifetime ISA balance of £5,000:
- Previous 25% charge: £1,250, leaving £3,750.
- New 20% charge: £1,000, leaving £4,000.
This illustrates the calculation only; actual account balances may include interest or investment gains or losses.
5. New First Time Buyer ISA: Launch planned for April 2029
What was the previous arrangement?
The Lifetime ISA has been one of the main government-supported saving options for eligible first-time buyers, offering an annual contribution limit of £4,000 and a 25% government bonus.
What has changed?
The government has confirmed plans to introduce a new First Time Buyer ISA from April 2029, replacing the Lifetime ISA for UK residents' new savers.
The announced features include:
- Maximum contributions of £4,000 per year.
- A 25% government bonus calculated on the final account balance, capped at £20,000 in total.
- A maximum qualifying first-home purchase price of £450,000.
- The government bonus paid when funds are withdrawn for a qualifying home purchase.
- No upper age restriction.
Existing Lifetime ISA holders will be able to continue contributing to and using their accounts under the applicable rules.
HMRC has also confirmed that direct transfers from Lifetime ISAs into the new First Time Buyer ISA will not be permitted, although both products may be used towards the same qualifying purchase, subject to their respective rules.
6. Help to Save: More providers from Spring 2028
The government has confirmed that the reformed Help to Save scheme will be introduced in Spring 2028.
Under the revised approach, participating banks, building societies and credit unions will be able to offer Help to Save accounts, rather than the scheme operating through a single-provider model.
This is intended to make the government-backed savings scheme more accessible to eligible lower-income savers.
Eligibility and provider participation will remain subject to the scheme's rules.
Key dates to remember
What does this mean for savers?
The Autumn Budget 2026 maintains the existing Cash ISA limit and removes several previously planned restrictions.
However, individuals who earn taxable savings interest above their allowances may pay more tax from April 2027.
For people saving towards their first home, changes to Lifetime ISA withdrawal charges and the planned First Time Buyer ISA may also be relevant.
Individual circumstances, UK tax residence and product eligibility determine which rules apply. UK ISA contributions are generally restricted to UK residents, subject to limited exceptions.
For more information, visit the official UK government publications:
Important information: This article is for general information only and does not constitute financial, investment or tax advice. It reflects government announcements and published guidance available as at 30 October 2026. Some measures are subject to legislation, eligibility requirements or further implementation details. UK tax treatment depends on individual circumstances and may change. The government announcements do not themselves represent changes to iFAST Global Bank products or account terms.
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