The UK tax landscape is evolving, with important changes coming for dividend, savings, and property income. Understanding these updates is key for business owners, investors, and anyone with multiple income streams. Here’s a clear guide to what’s changing and how it may affect you.
Dividend Tax Rates Increasing in 2026
From April 2026, dividend tax rates are set to rise by 2 percentage points for most taxpayers:
| Tax Band | Current Rate | 2026 Rate |
|---|---|---|
| Basic | 8.75% | 10.75% |
| Higher | 33.75% | 35.75% |
| Additional | 39.35% | 39.35% |
Dividends remain a popular method for company directors and shareholders to receive income. The dividend allowance is still in place, meaning the first portion of dividend income remains tax-free. However, any dividend above this allowance will now be subject to the updated rates. Careful planning can help maximise the tax efficiency of dividend income.
Savings Income Tax Rates Rising in 2027
Tax on savings income will increase by 2 percentage points across all bands from April 2027:
| Tax Band | Current Rate | 2027 Rate |
|---|---|---|
| Basic | 20% | 22% |
| Higher | 40% | 42% |
| Additional | 45% | 47% |
Savings income includes interest from bank accounts, bonds, and other financial investments. Individuals may want to consider tax-efficient savings vehicles, such as ISAs, to reduce the impact of the higher rates.
Separate Tax Rates for Property Income
From April 2027, property income will have its own separate tax rates, similar to the treatment of dividend and savings income:
| Tax Band | Property Income Rate |
|---|---|
| Basic | 22% |
| Higher | 42% |
| Additional | 47% |
This applies to rental income from residential and commercial property. Finance cost relief, such as mortgage interest, will be provided at the basic property rate of 22%, helping landlords and property investors plan cash flow and tax liabilities more effectively.
Reporting and Payment Remains the Same
Although tax rates are changing, the process of reporting and paying tax on dividends, savings, and property income will remain unchanged. Taxpayers will continue to use the Self Assessment system, so the key difference is how much tax is charged, not the reporting method.
Why Planning Is Important
With the increase in tax rates across dividends, savings, and property income, planning ahead is more important than ever:
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Directors may need to review salary vs dividend strategies
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Savers can explore tax-efficient accounts
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Landlords should check finance and property income structures
Proactive planning helps reduce unnecessary tax, maximise allowances, and maintain flexibility in financial decisions.
At Cloud 9 Accounting Services, we help individuals and businesses navigate HMRC rules, ensuring you know if you qualify for exemptions or need to prepare for digital compliance.
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