What’s Changing and When
The UK government has introduced new tax rates for dividend, savings, and property income under Budget 2025. The key changes are:
- Dividend income tax rates will increase from 6 April 2026. (gov.uk)
- Property and savings income tax rates will rise from 6 April 2027. (gov.uk)
New Rates Overview─ Examples for Basic Rate Taxpayers:
| Income Type | Old Rate (%) | New Rate (%) |
|---|---|---|
| Dividend income | approx 8.75%‡ | ~10.75% from April 2026 (moneyweek.com) |
| Property income | ~20% | ~22% from April 2027 (gov.uk) |
| Savings income | ~20% | ~22% from April 2027 (gov.uk) |
‡ The exact current dividend rate depends on band but basic rate is set to rise.
Who Should Pay Attention
- Individuals with significant investment portfolios, relying on dividend payments.
- Landlords and property investors who earn property income beyond the personal property allowance.
- Those with high savings account balances, and income from interest or fixed returns.
- Individuals in estates (deceased persons’ income), which follow the same rules. (gov.uk)
Practical Tips & Strategies
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Review income sources separately: Because different kinds of income will be taxed under different rates, aligning your savings vs investment vs property strategies can help.
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Make use of ISAs and tax-efficient vehicles: ISAs shelter savings and investment income from tax; maximizing them before changes takes effect is smart.
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Accelerate dividend income: If you’re a shareholder, it may make sense to schedule dividend payments before the 2026/27 tax year where feasible.
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For property owners, consider deductions like mortgage interest still—but be mindful of interest relief phased changes, and cash flow forecasting to absorb higher tax bills.
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Check allowances and reliefs: The Personal Savings Allowance, Dividend Allowance, and Property Allowance continue to offer protection for smaller incomes in these categories. (gov.uk)
Example Scenario
Case Study: Sarah, a higher-rate taxpayer
Sarah receives:
- £2,000 in dividend income
- £4,000 in property profit
- £5,000 in savings interest
Under the new rates:
- Dividend income taxed ~35.75%
- Property income taxed ~42%
- Savings taxed ~42%
Her tax burden on these non-employment incomes will increase significantly from 2026 and 2027, so preventing leakage (e.g., via reliefs, allowances, tax-efficient investments) becomes key.
Takeaway
Change is coming in effect with Budget 2025:
- April 2026: Dividend tax rates rise
- April 2027: Increases for savings & property income
Review upcoming income, spring-clean tax-efficient usage of ISAs, and plan ahead with tax advisors if you expect to be impacted. Long-term gain requires short-term preparation.
Category: Tax Planning
Author: NomadicTax Research Team
ReadTime: 5-8 min
Published: true