Rachel Reeves’s tax shake-up: time to plan ahead, from Isas to self-assessment
Chancellor Rachel Reeves's tax reforms, set for April 2027, will reshape savings, investment, and self-assessment rules, affecting Isas, tax on savings and rental income, and the Making Tax Digital rollout. Changes include a reduced cash Isa allowance for under-65s, higher tax rates on savings and property income, and lower thresholds for digital tax reporting. Experts urge individuals to review their financial strategies now to adapt to the new system. The reforms aim to balance taxation between earned income and income from assets.
- ▪From April 2027, savers under 65 will be limited to £12,000 in cash Isas annually, down from the current £20,000 full allowance.
- ▪Tax on savings and rental income will rise by 2 percentage points, meaning basic-rate taxpayers will pay 22%, higher-rate 42%, and additional-rate 47%.
- ▪Making Tax Digital will extend to sole traders and landlords with income over £30,000 starting April 2027, requiring digital record-keeping and quarterly reporting.
- ▪Individuals are advised to use current Isa allowances fully before the rules change and consider tax-efficient strategies like spousal accounts or premium bonds.
- ▪Experts recommend opening a dedicated business bank account and using HMRC-approved software to prepare for Making Tax Digital compliance.
- ▪Experts recommend opening a dedicated business bank account and using HMRC-approved software to prepare for Making Tax Digital compliance.
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The Making Tax Digital shake-up is a new way for sole traders and landlords to report their income. Photograph: Piotr Adamowicz/AlamyView image in fullscreenThe Making Tax Digital shake-up is a new way for sole traders and landlords to report their income. Photograph: Piotr Adamowicz/AlamyTaxRachel Reeves’s tax shake-up: time to plan ahead, from Isas to self-assessmentThe chancellor’s changes will come into force in April 2027, affecting everyone from savers to landlords and sole traders.
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