Investment - Articles - Shock rise in income tax on savings interest

Sarah Coles, head of personal finance, Hargreaves Lansdown: “This is a really shocking tax rise for savers. If the Budget speech includes a cut to the cash ISA allowance it will mean there’s a risk more people will be saving outside a tax-efficient environment and be exposed to this new tax rate.

The personal savings allowance will still protect the first £1,000 of savings interest for basic rate taxpayers and £500 of interest for higher rate taxpayer, but after that people will face a hike in their tax bill.

It’s going to be more important than ever to take advantage of cash ISAs, where all your savings are protected from tax. The change to the cash ISA allowance will not happen overnight so there is still an opportunity to take advantage of your allowance this year.”