Key takeaways
- Savings interest above your allowances is taxed at 24%, 44% and 49% from 6 April 2027. The Personal Savings Allowance and starting rate are unchanged.
- The cash ISA limit stays at £20,000, and a first-time stocks and shares ISA incentive is being designed.
- From 29 October 2026, Lifetime ISA withdrawals for homes above £450,000 carry a 20% charge instead of 25%.
- A First Time Buyer ISA replaces the Lifetime ISA in April 2029, with a 25% bonus on the final balance up to £20,000.
- The Budget confirms £4.7 billion for the Your First Home equity-loan scheme, helping 70,000 households.
Budget 2026 for savers and first-time buyers has four threads: higher tax on savings interest from April 2027, a cash ISA limit that stays at £20,000, a cheaper Lifetime ISA exit for pricier homes, and a new First Time Buyer ISA in 2029. This page pulls them together by what you are saving for, with links to the detailed posts.
If you hold savings outside an ISA
From 6 April 2027, interest above your allowances is taxed at 24% for basic rate, 44% for higher rate and 49% for additional rate taxpayers. The allowances stay: £1,000 Personal Savings Allowance for basic rate taxpayers, £500 for higher rate and nothing for additional rate, plus the £5,000 starting rate for people with low other income.
The Treasury says basic rate taxpayers would need over £25,000 in savings, in addition to any ISA savings, before paying tax. It says 84% of income tax payers are unaffected by the new rates. Read the savings and property income tax post for worked examples.
If you use cash ISAs
The cash ISA limit stays at £20,000. Budget 2026 dropped the planned cut. The overall ISA allowance is £20,000 a year, split however you choose between ISA types. See the cash ISA limit post.
The government is also working with industry on an ISA incentive for people who invest in a stocks and shares ISA for the first time. No design has been published.
If you are saving for a first home now
Until April 2029 the Lifetime ISA remains the government-backed route. Two details matter.
- The £450,000 cap stays. It will apply to the Lifetime ISA and to the new First Time Buyer ISA.
- A cheaper exit above the cap. From 29 October 2026, withdrawals for qualifying purchases above the cap carry a 20% withdrawal charge instead of 25%. The government says this recovers the bonus while letting savers keep their own contributions.
HMRC has updated its guidance for ISA managers and conveyancers. A buyer near the cap should check the current guidance before exchanging contracts.
If you will buy after April 2029
The First Time Buyer ISA replaces the Lifetime ISA from April 2029.
| Feature | Detail |
|---|---|
| Contribution limit | £4,000 a year |
| Bonus | 25% of the final balance, up to £20,000, paid on withdrawal |
| Property cap | £450,000 |
| Age | 18 or over, no upper limit |
| Help to Buy ISA holders | Can transfer in between 6 April 2029 and 1 December 2030 |
| Lifetime ISA holders | Cannot transfer, but can use both products on one purchase |
Existing Lifetime ISA accounts can continue under their current terms. The detailed design is in our First Time Buyer ISA post.
Government help with a deposit
The Budget confirms £4.7 billion for a new Your First Home equity-loan scheme for first-time buyers. The Treasury says it will help 70,000 households and that the Budget sets out its final details. The Budget papers we reviewed do not set out the scheme’s rules, so check the latest guidance before relying on it.
Other measures that touch savers
- Property investors. Rental profits are taxed at 24%, 44% and 49% in England, Wales and Northern Ireland from April 2027. See Budget 2026 for landlords.
- High-value homes. Owners of English homes worth £2 million or more pay a surcharge from April 2028. See the High Value Council Tax Surcharge.
- Pensioners. Savers over State Pension age should read Budget 2026 for pensioners.
What advisers should do
- Map each client’s savings by wrapper. Separate ISA, cash outside an ISA, and Lifetime ISA balances.
- Test the 2027 rates for clients with large cash balances outside an ISA.
- Check Lifetime ISA clients who may buy above £450,000. The lower withdrawal charge now applies.
- Flag the 2029 date to young clients saving for a first home. It affects which product they use.
- Diarise 1 December 2030 for Help to Buy ISA holders.
Frequently asked questions
Is the cash ISA limit going down?
No. Budget 2026 keeps it at £20,000.
What is the Lifetime ISA withdrawal charge for homes above £450,000?
From 29 October 2026 it is 20% for qualifying purchases above the cap, down from 25%.
When does the First Time Buyer ISA start?
April 2029. It replaces the Lifetime ISA for new savers.
Will I pay more tax on savings interest?
From 6 April 2027, interest above your allowances is taxed at 24%, 44% or 49%, two points higher than the earlier plan. Interest in an ISA is tax-free.
Sources
Rates, thresholds and rules in this guide were checked against HMRC and GOV.UK guidance on 1 November 2026. Tax rules change, so check the current position on GOV.UK or with a qualified adviser before acting. This guide is general information, not personal advice.