Rachel Reeves has confirmed significant tax changes that will affect millions in the UK. Starting from April 6, 2027, a new charge under the Vehicle Excise Duty will apply to certain cars. This includes increased taxes on savings and rental income.
Key changes include:
- The cash Isa limit will drop from £20,000 to £12,000 for individuals under 65.
- Income tax rates on savings and rental income will increase by 2 percentage points.
- Basic-rate taxpayers will pay 22% on interest or property income after these changes.
- Higher-rate taxpayers will see their rate rise to 42%, while additional rate taxpayers will face a 47% charge.
- The threshold for Making Tax Digital will fall from £50,000 to £30,000.
Additionally, starting April 2026, a £410 charge will be applied for certain cars under the new Vehicle Excise Duty rates. Cars with CO2 emissions below 100g/km will incur a fee of just £20 annually. However, petrol and diesel cars emitting over 255g/km registered after April 1, 2026, will face costs of £5,690.
This move has raised concerns among many taxpayers. Jason Hollands noted that “in a higher-tax environment, how you structure your savings will become even more important than it is now.” Many landlords are also reassessing their positions due to these impending changes.
As the government prepares for these adjustments, Kenneth Rowson expressed frustration: “VED has nothing to do with road tax and is just another tax imposed on motorists which goes into the general tax pot.” The full impact of these changes remains uncertain as officials continue to finalize the details.