Tax Planning
How Higher Taxes on Property, Savings & Dividends Affect Your 2026-2028 Planning
From April 2026 and 2027, UK will raise tax rates on dividends, savings, and property income and rearrange how allowances are applied; this article explains what you need to budget for.
By NomadicTax Research Team • 5-8 min read • May 8, 2026
## What’s Changing?
- **Dividend income rates increase** from 8.75% to 10.75% (ordinary rate), and from 33.75% to 35.75% (upper rate) from **6 April 2026**, while the additional rate remains at 39.35%. ([gov.uk](https://www.gov.uk/government/publications/income-tax-changes-to-tax-rates-for-property-savings-and-dividend-income/income-tax-changes-to-tax-rates-for-property-savings-and-dividend-income?utm_source=openai))
- **Savings income rates** across basic, higher, and additional tax bands will increase by **2 percentage points** starting **6 April 2027**. ([gov.uk](https://www.gov.uk/government/publications/income-tax-changes-to-tax-rates-for-property-savings-and-dividend-income/income-tax-changes-to-tax-rates-for-property-savings-and-dividend-income?utm_source=openai))
- **Property income** will have its own tax rates (basic 22%, higher 42%, additional 47%) from **6 April 2027**, aligning with the elevated savings rates. ([gov.uk](https://www.gov.uk/government/publications/income-tax-changes-to-tax-rates-for-property-savings-and-dividend-income/income-tax-changes-to-tax-rates-for-property-savings-and-dividend-income?utm_source=openai))
- From April 2027, reliefs and allowances will be **applied last** to property, savings & dividend income after other income has been taxed. ([gov.uk](https://www.gov.uk/government/publications/income-tax-changes-to-tax-rates-for-property-savings-and-dividend-income/income-tax-changes-to-tax-rates-for-property-savings-and-dividend-income?utm_source=openai))
## Who’s Most Affected
- Investors who receive significant **dividends** — company owners, shareholders.
- Individuals with interest from **savings & bonds**, bank accounts etc.
- Landlords and real estate investors.
- High-income individuals who derive income from multiple sources.
## Planning Strategy Examples
- **Diversify income streams**: If possible, use employment earnings before dividends, since personal allowances and reliefs apply first to non-asset income.
- **Time distributions**: If you have a year with lower income from non-asset sources, you might time dividend or property income to benefit from reliefs/allowances being more favourable.
- **Offsetting expenses**: For landlords, ensuring all allowable expenses are well documented can reduce net property income taxed at the new higher rates.
## Potential Pitfalls
- Missing the fact that the **ordering of allowances** changes in April 2027, meaning allowances and reliefs might **bite harder** against asset income if your other income is large.
- Overlooking that increases are phased: dividends from April 2026, others from 2027.
- Forgetting that although tax on asset income increases, additional rate remains unchanged for dividends, reducing the incremental burden for very high earners but still impacting middle & upper middle income people.
## Practical Action Steps
- Review previous year’s income split between employment/self-employment vs. assets (dividends, property, savings).
- Estimate tax for both scenarios (asset heavy vs earnings heavy) using updated rates: use HMRC calculators or advisers.
- For landlords: explore whether incorporating through a company may be more tax efficient under the new rates (bearing in mind company tax, admin, distributions).
- For savings: revisit asset placements, trusts, ISAs to shelter interest & dividend income where legitimately possible.
## Case Study
**Example**: John is a higher rate taxpayer. In 2026-27, he earns £70,000 salary plus £10,000 in dividends, and £5,000 in savings interest. Under old rules, his dividends were taxed at 33.75%, savings at 40%. Under new rules, from 6 April 2026, dividends ordinary & upper rate up by → 35.75%; for savings income from 2027↑ to 42%, which adds noticeable tax cost. If his other taxable income grows, the shifting of allowances may reduce the benefit of his investment income.
These changes are confirmed in Budget 2025 legislation and will have impact from April 2026 for dividends, and April 2027 for property & savings. Planning ahead now will help mitigate unwelcome surprises.