The Autumn Budget 2025 announced changes to the rates of tax that Savings, Rental & Dividend Income are charged.
Dividend Income
From 6th April 2026, dividend tax rates will increase by 2 percent:
- Basic rate: 8.75% increases to 10.75%
- Higher rate: 33.75% increases to 35.75%
- Additional rate: remains the same at 39.35%
The Dividend Allowance remains the same at £500.
Savings Income
From 6th April 2027, Income Tax rates on savings increase by 2 percent across all bands:
- Basic rate: 20% increases to 22%
- Higher rate: 40% increases to 42%
- Additional rate: 45% increases to 47%
The Personal Savings Allowance and starting rate for savings will remain unchanged.
Property/(Rental) Income
From 6th April 2027, rental income will be taxed separately from general income (as currently is) and will be taxed at the following rates:
- Basic rate: 20% increases to 22%
- Higher rate: 40% increases to 42%
- Additional rate: 45% increases to 47%
The £1,000 Property Allowance and the Rent-a-Room scheme remain unchanged.
Mortgage Interest relief will continue to apply but at the new 22% basic rate band.
Please note – Scottish Government have the ability to set their own property income rates so Rental Income in Scotland can not be confirmed until the Scottish Budget in January 2026.
Income Tax Ordering
From 6th April 2027, the Income Tax ordering rules will change. The Personal Allowance will be deducted from employment, trading or pension income first.
Summary
A summary of the key income tax changes relating to savings interest, rental (property) income and dividend income is detailed below:
| INCOME TYPE | CURRENT RATES | NEW RATES | EFFECTIVE DATE | NOTES |
| Dividend | 8.75% (basic) 33.75% (higher) 39.35% (additional) | 10.75% (basic) 35.75% (higher) 39.35% (additional) | 6th April 2026 | Dividend allowance remains unchanged |
| Savings (Interest) | 20% (basic) 40% (higher) 45% (additional) | 22% (basic) 42% (higher) 47% (additional) | 6th April 2027 | Personal Savings Allowance & starting rate remain unchanged |
| Property (Rental) | Taxed as General Income 20% (basic) 40% (higher) 45% (additional) | Taxed Separately 22% (basic) 42% (higher) 47% (additional) | 6th April 2027 | Mortgage Interest relief will be given at 22% |
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