Tax Planning
Understanding the Changes to Tax Rates on Dividends, Savings & Property Income
Income from dividends, savings, or property is being taxed differently from April 2026 and 2027—learn which rates apply, the order of taxation, and how allowances and reliefs now interact.
By NomadicTax Research Team • 5-8 min read • July 27, 2026
## What Changes Were Announced
Under Budget 2025, the UK government made several changes to how **dividend**, **savings**, and **property income** are taxed:
- **Dividend rates** increased for ordinary and upper bands **from 6 April 2026**. ([gov.uk](https://www.gov.uk/government/publications/income-tax-changes-to-tax-rates-for-property-savings-and-dividend-income?utm_source=openai))
- **Tax on savings income** increases by 2 percentage points across all rates beginning **from 6 April 2027**. ([gov.uk](https://www.gov.uk/government/publications/income-tax-changes-to-tax-rates-for-property-savings-and-dividend-income/income-tax-changes-to-tax-rates-for-property-savings-and-dividend-income?utm_source=openai))
- **Separate tax rates for property income** introduced **from 6 April 2027**, so that property income is taxed distinctly from other non-savings/non-dividend income. ([gov.uk](https://www.gov.uk/government/publications/income-tax-changes-to-tax-rates-for-property-savings-and-dividend-income/income-tax-changes-to-tax-rates-for-property-savings-and-dividend-income?utm_source=openai))
## What the Rates Will Be
| Income Type | Period | Basic Rate | Higher Rate | Additional Rate |
|---|---|---|---|---|
| Dividend income | from 6 April 2026 | **10.75%** | **35.75%** | **39.35%** (unchanged) ([gov.uk](https://www.gov.uk/government/publications/income-tax-changes-to-tax-rates-for-property-savings-and-dividend-income/income-tax-changes-to-tax-rates-for-property-savings-and-dividend-income?utm_source=openai))
| Savings income | from 6 April 2027 | **22%** | **42%** | **47%** ([gov.uk](https://www.gov.uk/government/publications/income-tax-changes-to-tax-rates-for-property-savings-and-dividend-income/income-tax-changes-to-tax-rates-for-property-savings-and-dividend-income?utm_source=openai))
| Property income | from 6 April 2027 | **22%** | **42%** | **47%** ([gov.uk](https://www.gov.uk/government/publications/income-tax-changes-to-tax-rates-for-property-savings-and-dividend-income/income-tax-changes-to-tax-rates-for-property-savings-and-dividend-income?utm_source=openai))
## Order of Income Types and Use of Allowances Now Matters
- **Non-property, non-savings, non-dividend income** (e.g., employment, trading) is taxed **first**.
- Then **property income** is taxed, followed by savings, then dividends. ([legislation.gov.uk](https://www.legislation.gov.uk/ukpga/2026/11/pdfs/ukpga_20260011_en.pdf?schedule-6-paragraph-4-5-a=&utm_source=openai))
- **Allowances and reliefs** must be used against non-property/savings/dividend income first before applying to property, savings, or dividend income. This impacts how much relief remains for those categories. ([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))
## Examples to Show the Impact
- **Dividends Example (2026–27)**: If John earns £40,000 in employment and £3,000 in dividends, the first £500 of dividends is tax-free; the rest taxed at **10.75%** (basic rate) over that allowance. ([gov.uk](https://www.gov.uk/tax-on-dividends?utm_source=openai))
- **Property & Savings Example (from 2027–28)**: Emma has £30,000 from her job, £5,000 from property renting, and £2,000 interest savings. She’ll lose allowance benefits on her property income unless all non-property income is fully offset first. The property income then taxed at **22%**, savings at **22%**, etc.
## What This Means for You
- If you earn from dividends, property, or savings—review how much income of each type you receive. Even small savings income could be taxed more under new higher rates after 2027.
- Consider structuring income to maximise reliefs under non-savings income first.
- Where possible, shift investment or dividend income into tax-advantaged accounts (e.g. ISAs) to avoid increased tax hit.
- Keep an eye on your property income; those with letting operations may need to adjust bookkeeping and forecasting ahead of April 2027.
With these changes, it's essential to project your taxable income streams and plan accordingly to avoid unexpected tax rises.