Four things you need to know about the Budget

The Chancellor’s latest Budget included some important changes for savers. There was a U-turn on plans to reduce the cash ISA allowance, while tax on savings interest is set to increase from April 2027.

If you have money in savings accounts, these changes could affect how you manage your money, the amount of interest you keep, and decisions around stewardship. We’ve picked out four announcements from the Budget to explore what they could mean for you.

1. The cash ISA allowance stays at £20,000

There was a change of direction on cash ISAs from what was announced in the 2025 autumn budget. The Government had previously proposed reducing the annual cash ISA allowance to £12,000 for most savers from April 2027. That proposal has now been dropped. The allowance will remain at £20,000 a year for adults of all ages.

This is good news if you use a cash ISA to build up your savings. Interest earned within a cash ISA is free from income tax, so it can be a useful way to put money aside, either for your giving or if you’re saving for a large purchase, without worrying about tax on the interest.

Find out about our Cash ISAs

2. Tax on savings interest is going up

From April 2027, the tax rates on savings interest will increase by two percentage points, on top of the increase already announced in the previous Budget.

The new rates will be:

• Basic-rate taxpayers: 24%, up from 20%.
• Higher-rate taxpayers: 44%, up from 40%.
• Additional-rate taxpayers: 49%, up from 45%.

These changes apply to savings interest held outside tax-free accounts, such as cash ISAs.

Most savers are unlikely to notice a difference. The Personal Savings Allowance means basic-rate taxpayers can currently earn up to £1,000 in savings interest each year without paying tax. For higher-rate taxpayers, the allowance is £500. Additional-rate taxpayers do not receive one.

This means, for example, that someone with £10,000 in a savings account earning 3% interest would receive £300 a year. Assuming they have no other taxable savings interest, this would be within the basic-rate Personal Savings Allowance.

The Government estimates that 84% of income taxpayers will be unaffected by the changes. If you have larger savings balances outside an ISA, though, it may be time to review how your money is held.

Find out about our Notice Accounts

3. Help with household energy bills

There is some support for households facing ongoing pressure from energy costs.

From January 2027, eligible households in council tax bands A to D in England will receive a £100 Household Energy Payment. The Government is also extending the temporary removal of VAT on domestic electricity until July 2027.

For families managing rising household costs, this will provide some additional help. It may also make it a little easier to keep putting money aside each month for an emergency fund.

Find out about our Easy Access accounts

4. Take another look at your savings

With changes to savings taxation coming in, now is a good time to look at where your money is held and whether your savings arrangements still meet your needs.

Do you have enough set aside for unexpected expenses?

Are you making use of your ISA allowance?

Are you able to continue supporting the churches and Christian causes that matter to you? 

Faithful stewardship means thinking carefully about how we use the money entrusted to us. Saving helps us prepare for the future and meet our responsibilities. Giving allows us to support the work of churches, charities, and ministries that make a difference in people’s lives.

We believe the money we save can have a purpose beyond earning interest. If you’re reviewing where to keep your savings, we’d love you to consider Kingdom Bank. Explore our range of savings accounts and find out how you can give your money a mission.

Find out more about saving with Kingdom Bank

Kingdom Bank does not provide financial advice. Please seek independent financial advice when structuring your finances.