Tax Planning
How the Changes to Property, Dividend, and Savings Income Rates Affect Your Tax Planning
New income tax rates on dividend, property, and savings income effective from April 2026-2027 demand a fresh look at investment and income strategies — here’s how to plan.
By NomadicTax Research Team • 5‐8 min read • February 27, 2026
## What changed
Under the “Change to tax rates for property, savings and dividend income” technical note published recently:
- **Dividend income tax rate** for individuals will change from current rates to a **reduced rate of 10.75%** for **2026-27**, effective **6 April 2026**. ([gov.uk](https://www.gov.uk/government/publications/changes-to-tax-rates-for-property-savings-and-dividend-income/change-to-tax-rates-for-property-savings-and-dividend-income-technical-note?utm_source=openai))
- **Property and savings income** rates will also be reformed, but **property/savings income rates rise** or adjust from **6 April 2027**, with property/savings income taxed at **22%** for estates, aligning with basic rates where applicable. Stateless dividends remain at 10.75% from April 2026. ([gov.uk](https://www.gov.uk/government/publications/changes-to-tax-rates-for-property-savings-and-dividend-income/change-to-tax-rates-for-property-savings-and-dividend-income-technical-note?utm_source=openai))
## Why this matters for tax planning
- Investors holding **dividends** should anticipate a dip in rate which may reduce cost of holding shares in some investment portfolios.
- Rental property owners or those with savings income—interest etc.—should forecast **higher rates** from 2027 and re-assess cashflows.
- This shifts where **tax-efficient structures** or timing might help: moving income into years before April 2026, timing disposals, or using allowances and reliefs effectively.
## Strategies for individuals and businesses
- **Dividend timing**: If you expect to receive large dividends, plan to allocate or declare them after 6 April 2026 when the rate falls to 10.75%. Conversely, avoid deferring too long into years where rates on other income rise.
- **Use of allowances**: Maximise Dividend Allowance, Personal Savings Allowance and other reliefs while rates are favorable; and plan to use them intelligently when property/savings income gets taxed more.
- **Entity structuring**: Consider whether income can be distributed through entities (companies, trusts) to take advantage of lower dividend rates; subject to broader UK rules.
- **Portfolio rebalancing**: If you have large savings or property income, invest in ways that generate dividend income rather than savings interest, where dividend rate is lower.
## Example
Suppose you expect £10,000 of dividend income in 2026-27, and £5,000 in savings interest. Your net liability under old and new rates might look like:
- Previous regime: Dividend taxed at, say, 32.5%; Savings at 20% up to allowance.
- New regime: Dividend at **10.75%** on full amount, Savings income taxed at 0% (if within Personal Savings Allowance), but property/savings income for estates at **22% from 2027**.
You might accelerate dividend payments to hit sooner than other income increases.
## Risks & things to watch
- • **Legislation**: Always confirm that legislative drafts are enacted as expected—technical notes signal intent but final law matters.
- **Investment risk**: Concentrating on dividend income might shift you to sectors or companies with more volatility.
- **Allowance changes**: Changes to allowances or thresholds (e.g. Personal Savings Allowance, Dividend Allowance) may also occur—budget alerts must be monitored.
## Bottom line
Taking account of shifting rates from April 2026 and 2027 will help you protect income, optimise investment returns, and avoid surprises. Strategic harvesting of income, prior timing, and structuring income sources with clarity are keys to keep more of your returns.