Paul Lewis: January money news
Petrol costs will rise and higher taxes on savings are coming, but the protection for money in bank accounts is going up too.
Petrol costs will rise and higher taxes on savings are coming, but the protection for money in bank accounts is going up too.
Savings up to £120,000 in an individual bank or building society account are now protected if the business goes bust. The new limit replaced the old one of £85,000 from 1 December and is doubled for a joint account.
If you have accounts in two banks that are part of the same group the limit applies to the total across both banks. It also applies to money in credit unions.
A higher limit of £1.4 million applies to ‘temporary high balances’ – for example, if you have recently sold a house, inherited money, or received a compensation payout. It lasts for six months.
If you receive dividends from investments that are not held in an Individual Savings Account (ISA), the rate of income tax will rise from April.
The first £500 is free of tax but above that you will pay tax of 10.75% (8.75% this year) if you are a basic rate taxpayer and 35.75% (33.75% this year) if you pay higher rate tax.
The rate for top-rate taxpayers stays the same at 39.35%.
A year later, April 2027, the rates of income tax on savings interest will also rise – from 20% to 22% (basic rate), 40% to 42% (higher rate), and 45% to 47% (top rate).
The same increase will apply to property rental income but not in Scotland where rates are different.
The annual amount you can put into a tax-free ISA will stay at £20,000 until at least 2030/31.
But from April 2027 people under age 65 will only be able to put £12,000 of that into a cash ISA. If they have more savings the rest will have to go into a shares ISA.
That rule does not apply to people over 65, who will be able to put up to £20,000 a year into a cash ISA if they wish.
With those higher tax rates on savings looming this April and next, you should make sure you put the maximum you can afford into ISAs this tax year and in 2026/27.
The experts at Saga Money have more about changes to ISAs and tax on savings interest.
The cost of filling up a car will start to rise from September as the 5p a litre discount on the fuel duty – which began in 2022 – is phased out.
And in 2027/28 an annual rise with inflation will add around another 2p a litre. With VAT, the total extra tax on a litre will be around 8p.
A new tax per mile on electric vehicles will also begin in April 2028. More details as we get them.
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