Government Updates Rules for Special Savings Accounts

Treasury minister Rachel Blake gave an update about ISAs.

The Government has published new information about a new ISA product. The Treasury made this statement because big changes to ISA rules are coming soon.

Now, people can put up to £20,000 per year into ISAs, and they can choose how to split it. But this will change soon. MP Sarah Dyke asked if the Government would create 'charity ISAs' to help charities.

There are different types of ISAs: cash ISAs, stocks and shares ISAs, innovative finance ISAs, and Lifetime ISAs. People can also open a junior ISA for children under 18, with up to £9,000 per year.

Treasury minister Rachel Blake answered the question. She said the Government already has special savings accounts that help people donate to charities.

Gift Aid helps charities get more money from donations. It also encourages people to donate more. Gift Aid gives over £2.5 billion in tax relief.

One good thing about ISAs is that the interest or growth is tax-free. For other savings accounts, people can earn some interest without paying tax, but they pay tax on extra gains.

Basic rate taxpayers can keep up to £1,000 in interest per year without paying tax. Higher rate taxpayers can keep up to £500, and those with the highest rate get no allowance.

Ms Blake said the Government reviews all taxes and reliefs, and they want to help charities get the most out of the system.

Changes to tax on savings are coming soon.

There will be big changes to ISA rules and savings taxation. From April 2027, the £20,000 ISA limit will be reduced, and people can only put £12,000 into the accounts they choose.

The tax rate on interest earnings will also increase by two percentage points. This means basic rate taxpayers will pay 22% instead of 20%.

The tax rate will increase for all taxpayers. Higher rate taxpayers will pay 42% instead of 40%, and those with the highest rate will pay 47% instead of 45%.

Higher rate taxpayers will pay more, with a new rate of 42%.

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