The UK savings tax regime includes a generous range of reliefs and allowances, meaning that the vast majority of people with savings income pay no tax on it.

The Chancellor makes decisions on tax policy at fiscal events, and does not routinely comment on proposals.

At Autumn Budget 2025, the Government announced its intention to introduce a new First Time Buyer ISA(FTB ISA) to support people saving for their first home. On 23 June the Government published a consultation on the implementation of the FTB ISA, seeking views from industry and other stakeholders on its design and delivery. The consultation closed on 18 August 2026 and the Government is carefully considering the responses received.

Most unused pension funds and death benefits payable from a pension will form part of a person’s estate for inheritance tax purposes from 6 April 2027. This removes distortions resulting from changes that have been made to pensions tax policy over the last decade, which have led to pensions being openly used and marketed as a tax planning vehicle to transfer wealth, rather than as a way to fund retirement. These reforms also remove inconsistencies in the inheritance tax treatment of different types of pensions.

Estates will continue to benefit from the normal nil-rate bands, reliefs, and exemptions available. For example, the nil-rate bands mean an estate can pass on up to £1 million with no inheritance tax liability and the general rules mean any transfers, including the payment of death benefits, to a spouse or civil partner are fully exempt from inheritance tax. More than 90 per cent of UK estates will continue to have no inheritance tax liability in 2030-31 following these changes and the reforms will only affect a minority of those with inheritable pension wealth.

The Government will continue to incentivise pension savings for their intended purpose of funding retirement, with ongoing tax reliefs on both contributions into pensions and on the growth of funds held within a pension scheme. Pensions continue to benefit from very significant tax benefits, with gross income tax and National Insurance contributions relief costing £83.9 billion in 2024-25.

The Government recognises the importance of promoting confidence in pension saving and is committed to ensuring future generations of pensioners have security in retirement. An independent Pensions Commission has been established to guide the long-term future of our pensions system including through the lens of adequacy, fairness, and sustainability.

Estimates of the tax liabilities on savings income are available as part of Table 2.6 of the annually published Accredit official statistics:

https://assets.publishing.service.gov.uk/media/6a5a4cab24d4d0ad06d946d5/Table_2.6_Income_Tax_liabilities_by_marginal_rate_of_Income_Tax.ods

Tax year 2022-23 and years prior are available as a historic table in that same publication:
https://assets.publishing.service.gov.uk/media/6a548feb1228eb26a4cab7d9/Table_2.6a_-_Historic.ods

The 2023-23 and 2023-24 figures are based on HMRC’s Survey of Personal Incomes (SPI) outturn data. Data for 2024-25 and onwards are projections based on the 2023-24 SPI, projected in line with economic assumptions consistent with the Office for Budget Responsibility’s March 2026 Economic and Fiscal Outlook.

Under the FCA’s Consumer Duty, firms must act to deliver good outcomes for retail customers throughout their relationship with the firm. This includes acting in good faith, avoiding causing foreseeable harm, and enabling and supporting consumers to pursue their financial objectives. As part of this work, the FCA has set out its expectations of firms in relation to gone-away or disengaged consumers. Banks must make best efforts to contact such customers, to ensure that they can continue to access their products, such as savings accounts.

In the event that banks are not able to contact their customers, and they deem that the account has become dormant, they may elect to transfer the proceeds to the Government’s Dormant Assets Scheme, but banks’ first priority is to reunite customers with their assets.

The Government does not hold data on the total value of unclaimed savings held by financial institutions in the UK. However, in 2017, the independent Commission on Dormant Assets estimated there to be £1–2 billion of dormant assets held across eligible financial services sectors, including the banking sector. Since the opening of the Dormant Assets Scheme in 2011, there has been over £2.13bn of dormant funds transferred from participating banks and building societies alone, as of 31^st March 2025.

Under the FCA’s Consumer Duty, firms must act to deliver good outcomes for retail customers throughout their relationship with the firm. This includes acting in good faith, avoiding causing foreseeable harm, and enabling and supporting consumers to pursue their financial objectives. As part of this work, the FCA has set out its expectations of firms in relation to gone-away or disengaged consumers. Banks must make best efforts to contact such customers, to ensure that they can continue to access their products, such as savings accounts.

In the event that banks are not able to contact their customers, and they deem that the account has become dormant, they may elect to transfer the proceeds to the Government’s Dormant Assets Scheme, but banks’ first priority is to reunite customers with their assets.

The Government does not hold data on the total value of unclaimed savings held by financial institutions in the UK. However, in 2017, the independent Commission on Dormant Assets estimated there to be £1–2 billion of dormant assets held across eligible financial services sectors, including the banking sector. Since the opening of the Dormant Assets Scheme in 2011, there has been over £2.13bn of dormant funds transferred from participating banks and building societies alone, as of 31^st March 2025.

At Autumn Budget 2025, the Chancellor announced a reduction in the Cash Individual Savings Accounts (ISA) limit for those under 65, to encourage retail investment and drive better returns for savers.

Rules are needed to protect the integrity of the new Cash ISA limit. We have designed the rules to be as simple as possible for providers and consumers, and to retain maximum flexibility for consumers to build an investment portfolio that works for them.

Returns from investing remain tax free. Investors will still be able to hold cash in a non Cash ISA, but a flat rate charge will apply on any interest on cash held within a non Cash ISA to discourage long-term cash holdings.

A flat rate charge on interest on cash holdings in S&S ISAs was previously in operation prior to 1 July 2014.

The Government continues to support cash saving with a generous set of reliefs. Individuals under 65 will still be able to save up to £12,000 into a Cash ISA each year, and any savings income received in a Cash ISA will be tax free. Provisional figures for the average Cash ISA subscription in 2023/24 are £6993.

Outside of the ISA regime, there is a Personal Savings Allowance of up to £1,000 for basic rate taxpayers and £500 for higher rate taxpayers, and the Starting Rate for Savings, which allows for tax free savings income of up to £5,000 for those with earned income below £17,570. This means that in 2026-27 around 84 per cent of people with savings income will pay no tax on that income.

At Autumn Budget 2025, the Chancellor announced a reduction in the Cash Individual Savings Accounts (ISA) limit for those under 65, to encourage retail investment and drive better returns for savers.

Rules are needed to protect to integrity of the new Cash ISA limit. We have designed the rules to be as simple as possible for providers and consumers, and to retain maximum flexibility for consumers to build an investment portfolio that works for them.

Returns from investing remain tax free. Investors will still be able to hold cash in a non Cash ISA, but a flat rate charge will apply on any interest on cash held within a non Cash ISA to discourage long-term cash holdings.

A flat rate charge on interest on cash holdings in S&S ISAs was previously in operation prior to 1 July 2014.

The Government continues to support cash saving with a generous set of reliefs. Individuals under 65 will still be able to save up to £12,000 into a Cash ISA each year, and any savings income received in a Cash ISA will be tax free. Provisional figures for the average Cash ISA subscription in 2023/24 are £6993.

Outside of the ISA regime, there is a Personal Savings Allowance of up to £1,000 for basic rate taxpayers and £500 for higher rate taxpayers, and the Starting Rate for Savings, which allows for tax free savings income of up to £5,000 for those with earned income below £17,570. This means that in 2026-27 around 84 per cent of people with savings income will pay no tax on that income.

The government monitors developments in inflation and household saving through data published by the Office for National Statistics. Inflation can affect household saving behaviour through a number of channels, including its effect on real incomes, interest rates and confidence.

The household saving ratio was 9.9% in Q4 2025. This is slightly above the long-run average saving ratio since 1970, of 9.3%. Inflation was unchanged at 2.8% in May, having fallen from a peak of 11.1% in October 2022. The Government understands that higher inflation in recent years has added to household living costs, especially through the price of everyday essentials such as food and energy. The Monetary Policy Committee at the Bank of England has responsibility for controlling inflation, and the Government fully supports the action it is taking to sustainably return inflation to the 2 per cent target.

The Government wishes to encourage pension saving, to help ensure that people have an incomethroughout retirement. This is why, for the majority of savers, pension contributions are tax-free. This makes pensions tax relief one of the most expensive reliefs in the personal tax system, costing £78.2 billion in 2023/24.

The Government recognises the importance of promoting confidence in pension saving and is committed to ensuring future generations of pensioners have security in retirement. This is why the government announced a landmark two-phased review of the pensions system days after coming into office. The first phase, the Pensions Investment Review, focused on reforming the pensions landscape to boost savers’ pension pots. These reforms have been enacted through the Pension Schemes Act 2026. The second phase – the independent Pensions Commission – is building on these foundations and will make recommendations to the government on the broader questions of adequacy, fairness, and sustainability to guide the long-term future of our pensions system.

The Government recognises the challenges facing the country when it comes to pensions. On average, someone retiring in 2050 is set to have 8% (£800 per year) lower private pension income compared to a retiree in 2025 (in today’s earning terms), while nearly 15 million working-age people are not on track to have an adequate retirement income as measured by Target Replacement Rates.

The Government has already taken action to reform workplace pensions. The Pension Schemes Act received Royal Assent in April and will play a huge role in strengthening the private pensions market, providing better outcomes for pension savers and supporting UK growth.

We have also revived the Pensions Commission to address these very matters of adequacy, fairness and sustainability. The Commission published their interim report on 19 May 2026, setting out the key challenges facing the system and where it will focus its work next. This includes a particular focus on those most at risk of undersaving or poverty in retirement, including individuals on lower incomes, the self-employed, and those unlikely to own their own home in retirement. It will publish a final report and recommendations in early 2027.

Following publication of the Final Report, the Government will set out its response to the recommendations made and the strategy to deliver a strong, fair, and sustainable pensions system.

The Government recognises the challenges facing the country when it comes to pensions. On average, someone retiring in 2050 is set to have 8% (£800 per year) lower private pension income compared to a retiree in 2025 (in today’s earning terms), while nearly 15 million working-age people are not on track to have an adequate retirement income as measured by Target Replacement Rates.

The Government has already taken action to reform workplace pensions. The Pension Schemes Act received Royal Assent in April and will play a huge role in strengthening the private pensions market, providing better outcomes for pension savers and supporting UK growth.

We have also revived the Pensions Commission to address these very matters of adequacy, fairness and sustainability. The Commission published their interim report on 19 May 2026, setting out the key challenges facing the system and where it will focus its work next. This includes a particular focus on those most at risk of undersaving or poverty in retirement, including individuals on lower incomes, the self-employed, and those unlikely to own their own home in retirement. It will publish a final report and recommendations in early 2027.

Following publication of the Final Report, the Government will set out its response to the recommendations made and the strategy to deliver a strong, fair, and sustainable pensions system.