Income Tax Changes: Property, Savings & Dividends
Announced at Autumn Budget 2025. These are future changes not yet in effect — dividend rates change from April 2026; new property income rates and higher savings rates from April 2027.
📅 When do these changes take effect?
- • Dividend rates: From 6 April 2026 (2026/27 tax year)
- • Savings & property income rates: From 6 April 2027 (2027/28 tax year)
These rates do not apply to the current 2025/26 tax year. See current 2025/26 rates.
Dividend Rates
Basic: 8.75% → 10.75% | Higher: 33.75% → 35.75%
Savings Rates
Basic: 20% → 22% | Higher: 40% → 42% | Additional: 45% → 47%
Property Income Rates
New separate rates: 22% / 42% / 47%
Dividend Tax Rate Changes
From April 2026Applies to the 2026/27 tax year and subsequent years. Affects all UK taxpayers receiving dividend income.
| Band | Current (2025/26) | From April 2026 | Change |
|---|---|---|---|
| Dividend Allowance | £500 (tax-free) | £500 (tax-free) | — |
| Basic Rate (Ordinary Rate) | 8.75% | 10.75% | +2pp |
| Higher Rate (Upper Rate) | 33.75% | 35.75% | +2pp |
| Additional Rate | 39.35% | 39.35% | No change |
📅 Effective Date
The new rates apply to distributions made on or after 6 April 2026 (2026/27 tax year onwards).
🏢 Close Companies
The rate of tax on loans to, and benefits conferred on, participators in close companies (s455 CTA 2010) will also increase — aligned to the new upper dividend rate of 35.75%.
💡 Example Impact for a Director-Shareholder
A basic rate taxpayer receiving £10,000 in dividends (after the £500 allowance):
2025/26 (current)
£9,500 × 8.75% = £831.25 tax
2026/27 (new rate)
£9,500 × 10.75% = £1,021.25 tax
That's an extra £190 per year on £10,000 of dividend income for a basic rate taxpayer.
Savings Income Tax Rate Changes
From April 2027Applies to the 2027/28 tax year and subsequent years. Affects UK taxpayers with savings interest above their Personal Savings Allowance.
| Band | Current (up to 2026/27) | From April 2027 | Change |
|---|---|---|---|
| Basic Rate | 20% | 22% | +2pp |
| Higher Rate | 40% | 42% | +2pp |
| Additional Rate | 45% | 47% | +2pp |
| Income Tax Band | Tax-Free Savings Interest |
|---|---|
| Basic Rate Taxpayer | £1,000 |
| Higher Rate Taxpayer | £500 |
| Additional Rate Taxpayer | £0 (no allowance) |
📅 Effective Date
The new savings rates apply from 6 April 2027 (2027/28 tax year onwards).
🌍 Scope
These rates apply across the UK, including Scotland. The PSA and Starting Rate for Savings remain unchanged.
💡 Example Impact for a Higher Rate Taxpayer
A higher rate taxpayer receiving £5,000 in savings interest (after the £500 PSA):
Up to 2026/27 (current)
£4,500 × 40% = £1,800 tax
From 2027/28 (new rate)
£4,500 × 42% = £1,890 tax
That's an extra £90 per year on £5,000 of savings interest for a higher rate taxpayer.
New Property Income Tax Rates
From April 2027From 6 April 2027, property income will have its own separate tax rates for the first time. This applies to England, Wales and Northern Ireland.
| Band | Previous Rate (up to 2026/27) | New Rate (from 2027/28) | Change |
|---|---|---|---|
| Property Basic Rate | 20% | 22% | +2pp |
| Property Higher Rate | 40% | 42% | +2pp |
| Property Additional Rate | 45% | 47% | +2pp |
🏴 Scotland & Wales
The government will engage with the Scottish Parliament and the Senedd to provide them with the ability to set devolved property income rates in line with their existing Income Tax powers.
🏘️ Non-Resident Landlords
Secondary legislation will be updated to reflect the new basic rate for property income in the Non-Resident Landlord scheme and for property income distributions from REITs and property authorised investment funds.
⚠️ Scale of Impact
An estimated 2.4 million landlords (approximately 6% of taxpayers in 2029/30) will face an increase in tax as a result of this measure.
💡 Example Impact for a Basic Rate Landlord
A basic rate taxpayer with £8,000 net rental profit:
Up to 2026/27 (current)
£8,000 × 20% = £1,600 tax
From 2027/28 (new rate)
£8,000 × 22% = £1,760 tax
That's an extra £160 per year on £8,000 of rental profit for a basic rate taxpayer.
Change to Use of Allowances & Reliefs
From April 2027A technical but important change to how Income Tax is calculated — affecting taxpayers with multiple income sources.
What Is Changing?
Reliefs and allowances (such as the Personal Allowance) could be applied to property, savings and dividend income in any order, potentially reducing tax on those income types first.
From April 2027, general reliefs and allowances will only be applied to property, savings and dividend income after they have been applied to other income sources (e.g. employment, self-employment income).
📋 Who This Affects
Taxpayers who have both earned income (employment/self-employment) and investment income (property, savings, dividends). The ordering change may result in more of your investment income being taxed at higher rates.
✅ What Stays the Same
Reliefs and allowances that are specific to a particular type of income (e.g. the Personal Savings Allowance for savings income) will still apply to those types of income first where relevant.
💬 Plain English Summary
If you have a salary and also earn rental income or dividends, your Personal Allowance will now be used up by your salary first. This means more of your property/savings/dividend income could fall into a taxable band — and at the new higher rates. This is an additional reason to plan ahead with a qualified accountant.
Why Is the Government Making These Changes?
The government's stated objective is to ensure income from assets is taxed more fairly. Currently, those with property, savings or dividend income pay less tax than those whose income comes from employment or self-employment — primarily because asset income does not attract National Insurance Contributions (NICs).
By increasing rates on property, savings and dividend income, the government aims to narrow the gap between tax paid on work and tax paid on income from assets.
Who Is Likely to Be Affected?
Landlords & Property Investors
Individuals receiving income from letting residential or commercial property. Estimated 2.4 million landlords affected from April 2027.
Savers & Investors
Individuals earning interest from savings accounts, bonds, peer-to-peer lending and other savings products above their Personal Savings Allowance.
Shareholders & Company Directors
Individuals receiving dividend income from shares or company distributions, including director-shareholders of limited companies.
Worried About These Changes?
These rate increases could significantly affect your tax bill. Book a free consultation to understand your options and plan ahead.
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