The Autumn Budget announcement is always a big day in the UK’s financial calendar, and this year was no exception. In the hours leading up to the Chancellor’s speech, there was plenty of speculation-fuelled even more by a last-minute leak from the Office for Budget Responsibility (OBR) about the details of the budget. Social media buzzed, news outlets scrambled to interpret the hints, and many people wondered what surprises might be in store.
As the Chancellor took to the dispatch box just after lunchtime, the country tuned in to hear what would change for the years ahead.
There was a lot announced in the budget, which we covered in a deep dive here, but here is a snippet of one of the key topics.
Dividends, Savings and Property income tax
What are these taxes?
- Dividend income is money you receive from shares in companies.
- Savings income is interest you earn from things like savings accounts or bonds.
- Property income is money you make from renting out property.
Normally, these types of income are taxed at different rates from your salary, and there are some tax-free allowances.
What’s the change?
From April 2026 and April 2027, the Government will increase the tax rates on these types of income:
- Dividend tax: From April 2026 the basic and higher rates will each rise by 2%(to 10.75% and 35.75%). The additional rate stays at 39.35%.
- Savings income: From April 2027 the tax rate on savings interest will rise by 2% across all bands (to 22%, 42%, and 47%).
- Property income: A new, separate tax rates for property income will apply from April 2027: 22% (basic), 42% (higher), and 47% (additional) in line with savings income tax.
How much more tax could you be paying?
If you receive dividends, interest from savings, or property rental income, you’ll pay more tax on these from the dates above.
For example, if you’re a basic rate taxpayer and receive £2,000 in dividends, you’ll pay £215 in tax instead of £175.
Most people with small amounts of savings, dividends, or property income won’t see a big change, as tax-free allowances still apply. But those with larger amounts will pay more tax.
What Should You Do Now?
For most people, this Budget doesn’t require urgent action or a change of course. If you’ve been waiting for clarity before making financial decisions, you can continue with your plans. However, it’s important to recognise that, while there are few immediate changes, the impact of frozen allowances and future tax rises will build up over time.
For most, the best approach is to stay on track, keep your plans under review, and be aware of how gradual changes may affect you in the years ahead.
Need Advice?
With so many moving parts and individual circumstances, we believe in the value of independent, ongoing financial planning. If you don’t already have regular reviews, or if you’re unsure how these changes might affect you, please get in touch for a personal review. For clients who already benefit from our ongoing service, we’ll be happy to discuss the details and implications at your next annual review.
Remember: The best financial decisions are made with up-to-date, factual information and tailored advice. If you have questions or want to discuss your financial plan, we’re here to help.
Disclaimer
This summary is provided for general information purposes only and does not constitute personal financial advice, a recommendation, or guidance to make any financial decisions. The content is based on information available at the time of writing, including official Government announcements and reputable sources. Some measures discussed may be subject to further consultation, may not be implemented immediately, or could change as legislation develops.
Tax rules, allowances, and rates are subject to change and may vary depending on your individual circumstances and where you live in the UK. The impact of any changes will differ from person to person. You should not make financial decisions based solely on this summary. We strongly recommend seeking personalised, independent advice before taking any action in response to Budget announcements.
Past performance is not a reliable indicator of future results. The value of investments and the income from them can go down as well as up, and you may not get back the amount you invest.
