The rates
| Band | 2026/27 | 2027/28 (Budget 2025) | 2027/28 (Budget 2026) |
|---|---|---|---|
| Basic rate | 20% | 22% | 24% |
| Higher rate | 40% | 42% | 44% |
| Additional rate | 45% | 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
| Example | 2026/27 | 2027/28 (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
- The personal savings allowance: £1,000 for basic-rate and £500 for higher-rate taxpayers (Annex A).
- The 0% starting rate for savings.
- The cash ISA limit: £20,000 for all savers over 18 - the cut planned for April 2027 is reversed, so ISAs shelter more of your interest.
- The £1,000 property allowance and the Rent a Room scheme.
- Dividend tax rates (10.75%, 35.75%, 39.35%) and the £500 dividend allowance.
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.