HMRC has confirmed changes to tax rates for property, savings and dividend income, with the Labour Party government raising rates to ensure income from assets is taxed more fairly. The changes, announced on 20 October 2026, will increase tax on dividend income by 2 percentage points from April 2026 and on savings and property income by 2 percentage points from April 2027. Together, these changes are forecast to raise around £2.3 billion a year in the three years 2028/29 to 2030/31, according to the government.
Why the government is raising taxes on assets
Individuals with property, savings or dividend income currently pay less tax than those whose income comes from employment or self-employment because they do not pay National Insurance. The government is increasing taxes on property, savings and dividend income to help narrow this gap between tax paid on work and tax paid on income from assets.
The government confirmed: "Taken together these changes are forecast to raise around £2.3 billion a year in the three years 2028/29 to 2030/31. Both savings and dividend income are taxed on a UK-wide basis. The new rates of tax on property income will apply in England, Wales and Northern Ireland."
Dividend tax rates from April 2026
Tax on dividend income will increase by 2 percentage points. The ordinary rate will rise from 8.75% to 10.75%, and the upper rate from 33.75% to 35.75% from April 2026. The additional rate will remain unchanged at 39.35%.
These changes apply to all individuals and trustees subject to income tax on their dividend and savings income, according to Tax Scape.
Savings and property tax rates from April 2027
Tax on savings income will increase by 2 percentage points across all bands. The basic rate will rise from 20% to 22%, the higher rate from 40% to 42%, and the additional rate from 45% to 47% from April 2027.
The Labour Party government is creating separate tax rates for property income. Income tax is already charged on property income. These separate rates mean property income will have its own individual tax rates, as already occurs for the taxation of savings and dividend income. From April 2027, the property basic rate will be 22%, the property higher rate will be 42% and the property additional rate will be 47%. Finance cost relief will be provided at the separate property basic rate of 22%.
Who is affected and what remains the same
The government has stated it will engage with the devolved governments of Scotland and Wales to provide them with the ability to set property income rates in line with their current income tax powers in their fiscal frameworks.
Tax Scape said: "All individuals and trustees subject to income tax on their dividend and savings income. The property income tax rates change will apply to English and Northern Irish taxpayers."
The way individuals report and pay tax on property, savings and dividend income will remain the same – it is only the rates of tax charged that will change. The property income tax rates change will apply to English and Northern Irish taxpayers, while the devolved governments of Scotland and Wales will be given the ability to set their own property income rates within their fiscal frameworks.
