Tax Planning
Tax Planning for Asset-Rich Individuals: Navigating the New Property, Savings & Dividend Rates
With recent changes to the taxation of property, savings, and dividend income, asset-rich individuals must revise strategies to mitigate higher rates and make efficient use of reliefs.
By NomadicTax Research Team • 5-8 min read • August 24, 2026
## Understanding the Changes
From **6 April 2026**, dividend income rates increased by 2 percentage points: basic rate rose from 8.75% to 10.75%, upper rate from 33.75% to 35.75%. The additional rate remains 39.35%.
From **6 April 2027**, new separate tax rates will apply to **property income**: basic rate 22%, higher rate 42%, additional rate 47%. Savings income rates are also increased from April 2027. Allowances/reliefs such as the personal allowance will be applied first against employment/trading income, then property, savings, and dividend income in that order. ([gov.uk](https://www.gov.uk/government/publications/changes-to-tax-rates-for-property-savings-dividend-income/changes-to-tax-rates-for-property-savings-dividend-income?utm_source=openai))
## Strategic Planning Opportunities
• Use **ISAs and pensions**: Income from assets held within ISAs remains tax free. This makes ISAs especially attractive for dividend or savings income. Contribute up to annual limits.
• Timing of income: If approaching higher or additional rate thresholds, consider bringing forward dividend or property income to before April 2026/2027 where possible to benefit from lower rates.
• Use reliefs and allowances efficiently: For example, property-allowance (£1,000) and letting reliefs may reduce taxable income for landlords. Ensure that you claim all eligible expenses to minimise property profits.
• Consider incorporation: For those with letting businesses or rental income, holding property via a company may offer lower corporate tax rates and allow dividend extraction, though with costs and administrative burdens.
## Practical Examples
**Example 1**: A taxpayer with £30,000 employment income, £5,000 property profits and £2,000 dividends in the 2027/28 year. Under the new ordering:
1. Employment income taxed first using personal allowance
2. Property income taxed at 22% basic property rate
3. Savings income (if any)
4. Dividend income taxed at dividend rate after allowance.
They can allocate allowances to employment first to reduce exposure to higher rates on property or dividend income.
**Example 2**: Landlord with high mortgage interest expenses (finance costs). Under new rules, finance cost relief will be provided at the property basic rate (22%). For those in higher rate bands, this limits tax relief available. Restructuring expenses, or adjusting borrowing, may offer relief.
## Actionable Takeaways
- Review your investment portfolio to shift more income-producing assets into **tax-advantaged wrappers** before rate changes.
- For property income, ensure you understand new definitions and rates, and consulting a professional is helpful to assess whether incorporation or joint ownership can reduce effective tax.
- Plan dividends around timing thresholds.
- Keep detailed records of finance costs and allowable property expenses to maximise deductions.
This tax planning article aims to equip asset-rich individuals with actionable strategies to adapt to the new rates regime. Always consider personal circumstances and seek specialist advice where needed.