The new tax year begins on the 6th April, lasting until the 5th April 2026. It gives the government a chance to implement changes to tax rules or relief – including those aimed at savers. It’s also the time when the thresholds for tax resets – providing the perfect opportunity for savers to take advantage of their refreshed personal savings allowance and work towards their savings goals.
With so many moving parts, it can be tricky to get a hold on what’s changing, and what’s staying the same. To help, we’ve put together a list of things to watch out for in the new tax year.
Personal savings allowance
The personal savings allowance represents the amount of savings interest you can earn without paying tax. Currently, the maximum amount of interest you can earn without paying tax is £1,000 for basic-rate taxpayers (20%), although this diminishes as other forms of income increase above the personal income tax allowance of £12,570. For example, higher-rate taxpayers (40%) have an allowance of £500, and those who pay additional tax (45% or higher) have no tax-free interest on savings.
The relationship is direct – where each additional pound of income above the personal income tax allowance decreases the tax-free interest allowance by a pound, too.
For the 2025/6 tax year, the personal savings allowance will not change. However, the annual allowance will reset, giving you an opportunity to save more.
Individual Savings Accounts (ISAs)
An Individual Savings Account (ISA) is a great way to save whilst reaping the benefits of tax incentives for savers. Generally, ISAs allow savers to receive interest payments without tax, with a £20,000 annual allowance split across multiple accounts such as Cash ISAs, Lifetime ISAs or Stocks and Shares ISAs.
Whilst the ISA allowance is not changing for the 2025/6 tax year, the £20,000 saving allowance resets. If you haven’t hit the threshold for this year but are planning to put your savings into an ISA, it’s best to do so before the new tax year starts to make the most of this allowance! It’s also worth mentioning that there are rumours the ISA allowance will decrease – although this is still speculation [1].
Council tax
Councils tax their residents to pay for services such as waste management and education. The amount of tax a council charges is set individually per council, so it will vary based on where you live. For the upcoming tax year, councils may raise or lower tax rates, with a 4.99% raise being the maximum permitted by the government. It’s expected that most councils will increase their council tax bands this year – the County Council Network predicts that over nine in ten councils will impose the maximum raise.
Road tax
Vehicle excise duty, informally known as road tax, is the tax on road users’ vehicles. It’s a flat tax paid annually, with certain exceptions, such as for vehicles with a list price of over £40,000, or heavier-emitting diesel vehicles [2].
On April 1st 2025, vehicle excise duty will be updated in line with inflation [3]. Aside from this small increase, the most notable change is that electric vehicle owners, who were traditionally exempt from the tax, will have to pay.
For many savers, regular costs such as council or road tax increasing will have an impact on their outgoings and might mean people might start to feel a pinch financially. It’s a good idea to factor these increases into your budget– especially if you have a savings goal that you are hoping to reach.
[1] The Telegraph - Rachel Reeves considers cutting cash Isa limit to £4,000
[2] Gov.uk - Vehicle tax rates
[3] Gov.uk - Vehicle Excise Duty rates for cars, vans and motorcycles — from 1 April 2025
