Tax Planning
Navigating Tax Rates on Property, Dividends, and Savings: Change Ahead in the UK
Tax rates on property income, dividends, and savings are set to rise, shifting when reliefs and allowances apply—and this will impact both individuals and investors.
By NomadicTax Research Team • 6 min read • March 5, 2026
## Introduction
The UK government has announced substantial changes in the way **property income, savings, and dividends** will be taxed, taking effect from April 2026 and April 2027. These measures are part of the 2025 Budget and are poised to impact many taxpayers—from investors and landlords to savers.
## Key Changes
| Type of Income | Effective From | What’s Changing |
|----------------|------------------|------------------|
| **Dividends** | 6 April 2026 | Ordinary rate and upper rate increased by 2 percentage points (additional rate unchanged). ([assets.publishing.service.gov.uk](https://assets.publishing.service.gov.uk/media/6929b353345e31ab14ecf735/E03444720_Budget_2025_Web_Accessible.pdf?utm_source=openai)) |
| **Property Income** | 6 April 2027 | Separate property income rates: basic rate 22%, higher 42%, additional 47%. ([assets.publishing.service.gov.uk](https://assets.publishing.service.gov.uk/media/6929b353345e31ab14ecf735/E03444720_Budget_2025_Web_Accessible.pdf?utm_source=openai)) |
| **Savings Income** | 6 April 2027 | Savings rates also increased by 2 percentage points across all bands. ([assets.publishing.service.gov.uk](https://assets.publishing.service.gov.uk/media/6929b353345e31ab14ecf735/E03444720_Budget_2025_Web_Accessible.pdf?utm_source=openai)) |
| **Order of Reliefs & Allowances** | 6 April 2027 | Reliefs/allowances used at steps 2 and 3 of the income tax calculation will be applied only after income from property, savings, and dividends has been considered. ([assets.publishing.service.gov.uk](https://assets.publishing.service.gov.uk/media/6929b353345e31ab14ecf735/E03444720_Budget_2025_Web_Accessible.pdf?utm_source=openai)) |
## Practical Implications
- **Landlords and property investors** should budget for higher effective tax on rental income starting in 2027. If you load property income with high mortgage interest or maintenance costs research whether your tax position under the new rates still offers positive cash flow.
- **Shareholders relying on dividends** will see a slight increase in tax burden from April 2026. Consider timing dividend payments or rebalancing portfolios to account for this change.
- **Savers**, including those with interest-producing accounts, will pay more tax on savings starting 2027 unless the savings income falls below the thresholds set by the Personal Savings Allowance. It becomes even more important to utilise **ISAs** or tax-advantaged wrappers where possible.
- **Tax planning focus shift:** Under the new rules, allowances will be applied after “other” income sources—primarily employment or business income. That means reliefs like pension contributions or gift aid may be effectively “used up” by non-savings/dividend/property income, increasing effective rates on those income sources beyond current expectations.
## Actionable Strategies
- **Review your income mix now.** If you have flexibility, accelerating or deferring income (e.g., dividends, sale of property) before rates change could be helpful.
- **Use tax wrappers** such as ISAs and pensions to shelter income taxed under savings/dividends/property, particularly for individuals with considerable investment income.
- **Time your reliefs carefully.** Trustees of reliefs and allowances such as pension contributions should plan for earlier application where possible to avoid under-utilisation once the ordering rule kicks in in 2027.
- **Forecast cash flow under ‘new norm.’** Build a model projecting income and outgoings from 2026/27 onward, factoring in the rate hikes, to see whether alternative structures (e.g. holding property in certain ways) or geographic diversification could help.
## Conclusion
The UK’s Budget 2025 has introduced meaningful adjustments to how income from property, dividends, and savings is taxed. With rising rates and changes to the ordering of reliefs and allowances, the burden shifts noticeably for many taxpayers. By preparing now—prioritising tax-efficient investments and understanding the timing of reliefs—individuals can better navigate the coming changes.