Tax Planning

Income, Savings & Property – How New Rates & Relief Ordering Will Affect Your Tax Bill

From 6 April 2026 & 2027, changes to dividend rates, savings rates, and the order allowances and reliefs apply may significantly alter the tax you pay — here’s what savvy taxpayers should act on now.

By NomadicTax Research Team • 5-8 min read • April 17, 2026

## What’s Changing and When Four major changes are rolling out as part of the UK’s tax reforms from Budget 2025: - **Dividend tax rate increases** — from **6 April 2026**, the **ordinary dividend rate** rises to **10.75%**, and the **upper dividend rate** to **35.75%**. ([gov.uk](https://www.gov.uk/government/publications/income-tax-changes-to-tax-rates-for-property-savings-and-dividend-income?utm_source=openai)) - **Savings & property income rates** — from **6 April 2027**, new, higher rates apply: savings income will face rates of **22%**, **42%**, **47%** depending on tax band, and property income will similarly be taxed at these new separate rates. ([gov.uk](https://www.gov.uk/government/publications/income-tax-changes-to-tax-rates-for-property-savings-and-dividend-income?utm_source=openai)) important for landlords. - **Ordering of reliefs & allowances** — from **6 April 2027**, reliefs & allowances (like personal allowance, trading losses, etc.) used in steps 2 & 3 will need to be applied first against non-savings/dividend income before applying to property, savings, or dividend income. This reorganises how allowances are allocated. ([assets.publishing.service.gov.uk](https://assets.publishing.service.gov.uk/media/69286818a245b0985f0341f3/E03444720_Budget_2025_Web_Accessible.pdf?utm_source=openai)) ## Why It Matters: Example Situations - *Landlords with rental properties:* Under the new system, you might have non-rental income (employment/self-employment) taxed first, then property income gets taxed at **22%** (basic rate for property), and reliefs only after non-property incomes. Expenses like finance costs relief will have greater impact when applied after higher-rate brackets. - *High savers or dividend reliant investors:* If you receive sizeable savings interest or dividends, the elevated tax rates and altered ordering could mean paying more tax sooner — even if you're in the basic rate bracket by your non-dividend/non-savings income. ## Strategic Tax Planning Insights - **Maximise use of personal allowance & reliefs early**: Since reliefs must first reduce non-savings/dividend income from 2027, consider maximising deductions and losses in these types of incomes before their tax rates are elevated. - **Consider timing income & gains**: If you have control over when to realise dividend incomes or savings gains (for example via investments or share transactions), bringing them forward or deferring to align with threshold changes could reduce tax exposure. - **Review investment & property structuring**: With property income taxed separately and potentially at higher rates by band, explore joint ownership, rental profits vs. costs, or forming entities where appropriate. ## Actionable Steps to Take Now - Calculate your total income mix: separate what is from employment/self-employment vs. property/savings/dividends, across years 2025–26 and anticipate 2026–27 & 2027–28. - If you partly rely on dividends or savings, consult financial or tax advisors to consider shifting investments or using tax-efficient wrappers (ISAs, pension contributions) where possible. - For landlords and property investors, review current mortgage interest finance costs, property expenses, and profits. Ensure you know how reliefs apply and whether new rates push you into higher tax band earlier. - Keep an eye on upcoming tax statements from HMRC, and maintain updated digital records to align with MTD requirements. ## Risks and Mitigation - Misallocation of income types could lead to **over-taxation**: wrongly categorising savings or property income could push you into a higher liability. - Penalties or interest: If you fail to anticipate new rates, you may underpay tax due or be hit with penalties. - Trust distributions or non-UK resident investments could have unique interactions under these rules — professional advice is often warranted. ## Quick Summary Table | From | Change | |------|--------| | 6 April 2026 | Dividend rates up; non-residents lose notional dividend credit ([gov.uk](https://www.gov.uk/government/publications/abolition-of-the-dividend-tax-credit-for-non-uk-residents/abolition-of-the-notional-tax-credit-on-dividends-received-by-non-uk-residents?utm_source=openai)) | | 6 April 2027 | Separate rates for savings & property income; changed ordering of reliefs & allowances ([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)) | These shifts mean that many individuals — especially those with diverse income sources — may need to reconsider their tax planning approaches.