Tax on Savings and Rental Income From April 2027

From 6 April 2027 savings interest and rental profit are taxed at their own, higher rates: 24%, 44% and 49% under Budget 2026’s proposal, two points more than the 22%, 42% and 47% set at Budget 2025. Salary and dividend tax rates don’t change.

The rates

Band2026/272027/28 (Budget 2025)2027/28 (Budget 2026)
Basic rate20%22%24%
Higher rate40%42%44%
Additional rate45%47%49%

The savings rates apply across the UK. The property rates apply to rental income in England, Wales and Northern Ireland; Scotland and Wales can set their own property rates. Mortgage-interest relief for landlords is given at the property basic rate - 22% as legislated, 24% with Budget 2026 - instead of 20%. Neither salary nor dividend rates change.

What it costs: worked examples

Example2026/272027/28 (Budget 2025)2027/28 (Budget 2026)
Basic-rate saver: £30,000 salary, £3,000 interest£400£440£480
Higher-rate saver: £60,000 salary, £5,000 interest£1,800£1,890£1,980
Basic-rate landlord: £25,000 salary, £10,000 profit, £3,000 mortgage interest£1,400£1,540£1,680
Higher-rate landlord: £60,000 salary, £10,000 profit, £4,000 mortgage interest£3,200£3,320£3,440

England, Wales or Northern Ireland; no other income. Savings: the personal savings allowance (£1,000 basic rate, £500 higher rate) comes off first. Rental: profit is rent less allowable expenses; mortgage interest gives a tax reduction at the (property) basic rate.

What doesn’t change

Which band your rent and interest fall in

A new ordering rule sets your personal allowance against your earnings first. Your earnings then fill the bands, followed by property income, then savings, then dividends. So for most people with a salary, rental profit and interest sit in their highest band: on a £60,000 salary every pound of rental profit is taxed at the higher rate.

Is it law yet?

Partly. Budget 2025’s rates were included in Finance Bill 2025-26, now Finance Act 2026 - section 7 sets the property rates of 22%, 42% and 47% for 2027-28. Budget 2026’s extra two points are to be legislated in Finance Bill 2026-27. Our rental income calculator shows both 2027/28 versions.

Frequently asked questions

When do the new savings and property tax rates start?

From 6 April 2027, the start of the 2027/28 tax year. Budget 2025 set 22%, 42% and 47% (Finance Act 2026 enacts them for property income); Budget 2026 proposes 24%, 44% and 49%, which still has to pass in Finance Bill 2026-27.

Do the new rates apply in Scotland?

The savings rates apply across the UK. The property rates apply in England, Wales and Northern Ireland; Scotland and Wales can set their own property rates.

Is the personal savings allowance changing?

No. It stays £1,000 for basic-rate and £500 for higher-rate taxpayers, and the 0% starting rate for savings stays. The cash ISA limit stays £20,000.

What happens to mortgage interest relief?

Landlords still get a tax reduction rather than a deduction, but at the property basic rate from 2027/28: 22% as legislated, or 24% under the Budget 2026 proposal, instead of 20%.

In what order is my income taxed?

Your personal allowance is set against your earnings first. Then earnings fill the bands, followed by property income, then savings, then dividends - so rent and interest usually sit in your highest band.

Related

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