UK Dividend and Savings Tax Rises from April 2026: What Changes

The UK Spring Budget 2025 announced significant increases to tax on income from assets — dividends, savings interest, and property profits — to narrow the gap between tax on employment and tax on investment income. The first changes took effect on 6 April 2026; further property and savings rate changes follow in April 2027.

If you extract profit from a limited company as dividends, hold investments outside ISAs, or let UK property, these rate changes directly affect your net income. Planning now avoids surprises when you file Self Assessment or MTD year-end declarations.

Dividend tax rates from April 2026

Dividend tax rates increased by 2 percentage points from 6 April 2026. The ordinary rate rose from 8.75% to 10.75%, and the upper rate from 33.75% to 35.75%. The additional rate stays at 39.35%. The £500 dividend allowance for 2026–27 remains, but tax on dividends above that threshold is now higher across all bands.

For a director taking £40,000 in dividends above salary and the allowance, the 2-point rise adds roughly £800 in tax — before considering corporation tax already paid on company profit. Re-run your salary-versus-dividend model with the new rates.

Savings income: changes from April 2027

Savings income tax rates increase by 2 percentage points from 6 April 2027: the basic rate rises from 20% to 22%, the higher rate from 40% to 42%, and the additional rate from 45% to 47%. The Personal Savings Allowance (£1,000 for basic-rate taxpayers, £500 for higher-rate, nil for additional-rate) continues to shield some interest from tax.

Cash held outside ISAs and Premium Bonds winnings above allowances will face higher effective rates from 2027. Consider whether ISA contributions, pension contributions, or bond structures still suit your liquidity needs.

New property income tax rates from April 2027

From April 2027, UK property income will be taxed at dedicated property rates — 22% basic, 42% higher, and 47% additional — separate from employment and trading income rates. Finance cost relief for residential landlords will be provided at the property basic rate (22%) rather than the standard basic rate.

The income tax ordering rules also change from April 2027: the Personal Allowance will be deducted against employment, trading, and pension income first, before property, savings, and dividend income. This can push more property profit into higher bands for landlords with other income.

Other Budget 2025 changes affecting investors

Capital Gains Tax on disposals qualifying for Business Asset Disposal Relief or Investors' Relief increases to 18% from 6 April 2026. Inheritance Tax relief on agricultural and business property is capped at 100% for the first £2.5 million of combined value, with 50% relief above that from April 2026.

Venture Capital Trust income tax relief reduces from 30% to 20% for investments from 6 April 2026, while EIS and VCT investment limits increase. Carried interest moves fully into the Income Tax framework from April 2026.

Capital allowances for businesses

A new 40% first-year allowance applies to qualifying capital expenditure incurred on or after 1 January 2026. The main rate writing-down allowance for plant and machinery falls from 18% to 14% from 1 April 2026 for corporation tax and 6 April 2026 for income tax.

If you planned major equipment purchases, the enhanced first-year allowance may favour bringing expenditure forward into 2026 — model the timing against cash flow and profit.

How to respond

Directors should refresh extraction strategies with the new dividend rates. Landlords should model 2027 property rates against current projections — especially if mortgage interest relief interacts with the new property basic rate. Investors should review ISA and pension wrappers before savings rates rise.

FinnAccountings runs live salary-versus-dividend scenarios, tracks rental profit separately, and estimates your liability under current and upcoming rates — start a free trial and see the impact on your 2026–27 tax bill.