Savers hit as cash Isa limit slashed to £12,000: Landlords and investors also clobbered in a fresh raid on wealth

Savers, landlords and investors were clobbered in the Budget with a fresh raid on wealth.Rachel Reeves added 2 percentage points to tax rates on dividends, rental income and savings interest, which is expected to raise more than £2billion each year for the Treasury.The Chancellor also pulled the trigger on a seismic change to tax-free Isas, meaning the maximum that can be saved in cash each year will fall to £12,000 from April 2027.But Ms Reeves, fearing the wrath of older voters, opted to give over-65s a surprise reprieve by allowing them to continue squirrelling away the full £20,000 allowance in cash.Under-65s will instead have to invest £8,000 in a stocks and shares version if they want to use their full annual tax-free allowance.The bad news on cash Isas came as Ms Reeves delivered a shock tax hike on savings interest. Wealth grab: The Chancellor has pulled the trigger on a seismic change to tax-free Isas, meaning the maximum that can be saved in cash each year will fall to £12,000 from April 2027Savings interest is levied above the tax-free personal savings allowance, which is £1,000 for basic-rate taxpayers and £500 for higher-rate taxpayers.Currently, tax is charged at the same rate as income tax; 20 per cent, 40per cent and 45 per cent.But for savers these rates will rise to 22 per cent, 42 per cent and 47 per cent from April 2027.The Treasury already rakes in £6billion a year in savings interest tax receipts. The Office of Budget Responsibility (OBR) says the move will raise an extra £500million a year from 2028/29.More than one million pensioners were forecast to start paying tax on their savings before the announcement – with nearly three million savers set to be charged.Laura Suter, of AJ Bell, said: ‘Savers are being hit with another whopping tax increase, adding to the tax tsunami that’s hit them in the past few years.‘The combined forces of a freeze on income tax bands, higher interest rates and a frozen personal savings allowance have all dragged millions more people into paying tax on their savings – now they’re being clobbered with a tax rise as the cherry on top.’The tax that landlords pay on rental income will also be incurred at the higher 22 per cent, 42 per cent and 47 per cent rates from April 2027.The OBR says this will also bring in £500million a year for the Treasury per year from 2028/29.Jason Tebb, of OnTheMarket, says the additional tax on rental income is ‘disastrous’ for landlords, adding: ‘This reform will simply see more and more landlords removing themselves from the private rental sector for a further squeeze on rental supply.’Investors and entrepreneurs were not spared in the raid, either. The Chancellor revealed a hike to the dividend tax rate that will hit investors and small- business owners.The tax will be increased by two percentage points, meaning basic rate taxpayers will now be charged 10.75 per cent on dividend income they receive above the annual allowance of £500. Higher-rate taxpayers will pay 35.75 per cent when the changes come in April. The additional rate will remain unchanged at 39.35 per cent.The OBR predicts it will result in an extra £1.2billion tax take for the Treasury by 2027/28. Jason Hollands, of Evelyn Partners, said: ‘These hikes are aimed mainly at extracting more cash from the UK’s small-business owners, who don’t have the option of owning their company shares in a tax-efficient Isa.’ But at least the over-65s are spared  Relief: Jules Ackerman, 74, last night said she was glad she will be able to keep her full £20,000 cash Isa allowancePensioners with cash Isa savings breathed a sigh of relief last night after the Chancellor exempted them from cuts to the allowance.Rachel Reeves slashed the £20,000 annual tax-free savings allowance to £12,000, with an additional £8,000 allowed to be placed in stocks and shares Isas.But those over the age of 65 were exempt from these changes, allowing them to continue to live off pension savings invested there without being taxed.Jules Ackerman, 74, last night said she was glad she will be able to keep her full £20,000 cash Isa allowance.The former nurse, who continues to work as a carer and dog-sitter, has put her NHS pension into an Isa and tries to top up these savings every month. She moved to Aberdeenshire to find a cheaper home but spends her time between Scotland and the South West of England.Ms Ackerman said: ‘I haven’t got enough money to gamble, so I didn’t want a stocks and shares Isa. It would be so alien to me and I couldn’t afford to lose what I’ve got. If you’re trying to save some pennies, you don’t want to be taxed on your money again.’ Share or comment on this article: Savers hit as cash Isa limit slashed to £12,000: Landlords and investors also clobbered in a fresh raid on wealth

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