This article sets out exactly what is changing, who is affected, and what you can do before April 2027 to protect your position.
The Cash ISA Allowance is Being Cut
Right now, anyone under 65 can put up to £20,000 a year into an ISA and choose freely how much goes into cash. From 6 April 2027, that changes: the cash ISA allowance will be capped at £12,000, with the remaining £8,000 needing to go into a stocks and shares ISA or another qualifying type. Over-65s keep the full £20,000 cash ISA allowance. The change only affects new contributions from that date, so money already saved in cash ISAs is unaffected, and transfers between cash ISA deals will still be allowed.
If you have savings in standard accounts, consider whether moving some or all into a Cash ISA before 5 April 2027 makes sense for your situation. This is the final tax year when under-65s can contribute the full £20,000 to cash. Whether this matter depends on your savings level, tax position, and how soon you might need the money.
What Happens to Money Above £12,000 from April 2027
If you want to shelter more than £12,000 from April 2027, the excess will need to go into a stocks and shares ISA, which carries investment risk that cash does not.
How the April 2027 Savings Tax Rise Will Affect You & What to Do Now
From 6 April 2027, tax on Savings interest goes up by 2 percentage points across every band. Basic rate taxpayers move from 20% to 22%, higher rate from 40% to 42%, and additional rate from 45% to 47%. The personal savings allowance stays the same, so basic rate taxpayers still get £1,000 of interest tax-free and higher rate taxpayers £500.
For example,
It is easy to look at 2% and think it hardly matters. Consider Mark, who earns £30,000 and has £5,000 in savings interest sitting outside an ISA. After his £1,000 PSA, he pays tax on £4,000 of that interest. Right now, that is an £800 bill. From April 2027, the same money in the same account costs him £880. Nothing about his situation has changed. Only the rate. And the higher the balance or the tax band, the more that gap widens.
The fix is straightforward for most people: get savings into an ISA before the deadline arrives. For couples, using both partners' allowances doubles the tax-free cover available to the household. It is also worth a quick check on whose name the savings sit in. A basic rate taxpayer with a £1,000 PSA will consistently pay less on interest than a higher rate taxpayer who only gets £500. Same money, different outcome, just because of whose name is on the account. If your income comes from a mix of salary, savings and property, the new rates make it worth sitting down with an accountant before April 2027 rather than finding out what it costs when the bill arrives.
Buy-to-Let Landlords: What is Changing & What to Do
From 6 April 2027, rental income will be taxed at separate rates: 22% (basic), 42% (higher), and 47% (additional).
These apply to individual landlords in England, Wales and Northern Ireland. There is one small offset: mortgage interest relief, currently calculated at 20%, will increase to 22% in line with the new basic rate, though this does not come close to offsetting the overall tax increase.This is not happening in isolation. Changes to mortgage interest relief, higher stamp duty on additional properties, and previous adjustments to capital gains tax have already squeezed returns over the past decade. The April 2027 rate rise is the latest addition to that list. For some landlords, the honest question is no longer how to manage the tax but whether the yield, after everything, still makes the property worth holding.
Your Options & What to Consider
There are broadly three routes landlords are weighing up:
None of these decisions should be rushed. The right answer depends on the size of the portfolio, existing mortgage arrangements, and your overall tax position. If you have not yet worked out what the new rates mean for your rental income specifically, now is the time, ideally with a qualified tax adviser rather than a rough estimate.
How UKPA Can Help?
UKPA helps property owners make informed decisions on mortgages, taxes, and rental income with expert advice.
Making Tax Digital Extends to More Self-Employed People & Landlords
Making Tax Digital for Income Tax (MTD for ITSA) is already live for sole traders and landlords with qualifying gross income above £50,000. From 6 April 2027, it extends to those with qualifying income above £30,000. A further threshold drops to £20,000 follows in April 2028.
Qualifying income is your combined gross income from self-employment and property, before any expenses are deducted. Income from employment or pensions does not count.
HMRC will check your 2025/26 tax return (due by 31 January 2027) to identify who falls into the April 2027 group. If you meet the threshold, HMRC will write to you, but you should not wait for that letter before preparing.
What MTD Requires
Under MTD, you must keep digital records of all business income and expenses throughout the tax year using HMRC-recognised software. You then submit four quarterly updates to HMRC each year, followed by a Final Declaration by 31 January that replaces the traditional self-assessment return.
The quarterly deadlines under the standard tax year run to 7 August, 7 November, 7 February and 7 May. All submissions must go through compatible software. HMRC's own online portal is no longer available for those within MTD, including for the year-end Final Declaration.
Unlike those who joined MTD in April 2026 (who received a soft landing on penalties in year one), those joining in April 2027 face the full penalty regime from their first quarterly deadline. A missed submission earns one penalty point. You receive £200 when you reach the 4-point threshold. You continue to receive an ADDITIONAL £200 penalty for every subsequent late submission until points are reset.
What to Do Now
If your combined gross income from self-employment and property is close to or above £30,000, check your figures for the 2025/26 tax year as soon as you can. If you are in scope, start researching compatible software now. Choosing and testing software in the autumn gives you time to connect it to your business bank account and get comfortable with the process before your first quarterly submission in August 2027.
If you do not already have a separate bank account for your business, opening one makes record-keeping significantly easier. Most accounting software can connect directly to a business account and pull in transactions automatically, reducing manual entry.
The most common mistake people make is leaving registration until January 2027, after filing their Self-assessment return. By that point, there is very little time to choose software, test it and register through HMRC's MTD service before the April start date.
Conclusion
April 2027 represents a genuine shift in how savings, investment and self-employment income will be taxed. For most people, the most useful thing to do right now is use this tax year's full cash ISA allowance while it is still available, review where cash savings are held, and, if you are a landlord or sole trader near the £30,000 threshold, start preparing for Making Tax Digital well ahead of the deadline.
These are not abstract rule changes. Each one affects how much of your money you keep. Acting in the current tax year, rather than scrambling in the weeks before April 2027, gives you the most options.
Frequently Asked Questions
From April 2027, taxes on savings income will increase by 2%. Basic-rate savers will pay 22% on interest, higher-rate savers 42%, and additional-rate savers 47%. Using ISAs remains the best way to avoid paying tax on your savings.
Pension income itself won’t be taxed differently in 2027. However, from April 2027, pension pots will be included in inheritance tax calculations, meaning larger pensions will be taxed when passed on.
From April 2027, the tax rates on rental income will rise by 2%. You can reduce the amount you pay by claiming all allowable expenses and using tax reliefs. It’s also worth considering ownership structures like joint ownership or holding property through a company.
Yes, you can transfer old ISAs to a new provider without losing the tax-free status. However, from April 2027, under-65s won’t be able to transfer money from stocks and shares or Innovative Finance ISAs into cash ISAs to get around the new £12,000 limit for cash ISAs.
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