Clause 1

Debate between Gareth Davies and Jim Shannon

Monday 12th January 2026 Commons Chamber

[Jim Shannon]

A valid point that my constituents have brought to my attention is that if they pay the higher rate of tax, tax on the interest from savings rises to 40%. Those who scrimp and save and put their money away for a rainy day will be penalised. Does the shadow Minister agree that that is absolutely immoral and very wrong?

[Gareth Davies]

I agree. We are trying to create a savings culture. We are trying to get people to take responsibility, and to put their income away for a rainy day and for their retirement. As I will go on to say, the Opposition’s position is that the Bill does not achieve that; in fact, it does the very opposite.

As I was saying, clause 4 increases the ordinary and upper rates of income tax charged on dividend income by 2%, a fact the Minister seemed to miss out in his opening remarks. The income tax rate hike will apply from the tax year 2026-27. Clause 5 sets the savings rate of income tax for the tax year 2027-28 two percentage points higher than it is this year, and than the rate set in the Bill for 2026-27.