Savings and property income tax rate increases 

The measure

At Budget 2025, the former Chancellor announced increases in the tax rates for savings and property income. From 6 April 2027, the basic rate was due to increase from 20% to 22%, the higher rate was due to increase from 40% to 42% and the additional rate was due to increase from 45% to 47%. 

At Budget 2026, the Chancellor announced a further two percentage point increase in the income tax rates applying to savings and property income from 6 April 2027. The basic, higher and additional rates will be 24%, 44% and 49% respectively, rather than the 22%, 42% and 47% announced at Budget 2025. The changes will be legislated for in Finance Bill 2026/27. 

The savings nil rate band (often referred to as the savings allowance) will remain at £1,000 for basic rate taxpayers and £500 for higher rate taxpayers. Additional rate taxpayers are not eligible for a savings nil rate band.  

A £1,000 property rental allowance can apply as an alternative to the deduction of individual expenses. The preferred option will depend on the expenses incurred by the property business. 

Who will be affected?

Individuals and trustees subject to income tax on savings income will be affected. The savings income tax rates will apply across the UK. 

The property income tax rate increases will affect taxpayers with taxable property income in England, Wales and Northern Ireland. The government has provided the devolved governments of Scotland and Wales with the ability to set property income rates in line with their current income tax powers. 

When will the measure come into effect?

The basic, higher and additional rates of income tax on savings and property income will be 24%, 44% and 49% respectively from 6 April 2027.