Budget 2026: Savings and Property Tax Rises Explained

Budget 2026 brings a further increase to the tax rates applied to savings interest and property income, adding another two percentage points to increases already announced last year. From 6 April 2027, the basic, higher and additional rates of tax on both types of income will rise, potentially leaving some savers and landlords with less income after tax.

The changes build on measures announced at Budget 2025, meaning the tax rates on savings and property income will be higher than originally planned. However, not everyone will be affected in the same way. Your personal allowances, the amount of taxable income you receive and how you hold your savings or property will all influence the impact.

What are the Budget 2026 savings and property tax changes?

The government originally announced a two-percentage-point increase to savings and property income tax rates at Budget 2025. Budget 2026 adds a further two-percentage-point increase from April 2027.

This means the rates will rise by four percentage points in total compared with the rates applying before the original changes. The new rates will apply to taxable savings interest and property income, rather than automatically increasing the tax paid by everyone who has savings or owns a property.

The table below summarises the rates due to apply from April 2027.

The new savings rates will apply across the UK. The separate property income rates will apply in England, Wales and Northern Ireland, with arrangements for Scotland reflecting its devolved income tax powers.

The government has said that the additional revenue will help fund wider measures, including support for retail, hospitality and leisure businesses. Its stated position is that the changes will focus more tax on income from assets while leaving the main rates of tax on earnings unchanged.

You can read the official announcement in the government's Budget 2026 document.

How will the Budget 2026 savings tax increase affect you?

The savings tax increase is most relevant if you receive interest from savings accounts and that interest is taxable after any applicable allowances.

For example, imagine a basic-rate taxpayer has £2,000 of savings interest, of which £1,000 falls within their Personal Savings Allowance. Assuming the remaining £1,000 is taxable at the savings basic rate, the tax would rise from £200 at 20% to £240 at 24%.

That is an additional £40 in tax in this simplified example. The actual amount will depend on your income, allowances and the rules applying to your circumstances.

The Personal Savings Allowance is not being removed by these rate increases. It currently allows basic-rate taxpayers to receive up to £1,000 of savings interest tax-free and higher-rate taxpayers up to £500. Additional-rate taxpayers do not receive this allowance. A separate starting rate for savings may also apply to eligible people with lower levels of other income.

Money held in a Cash ISA continues to benefit from tax-free interest under the ISA rules. Budget 2026 also confirms that the annual Cash ISA limit will remain at £20,000, rather than falling to £12,000 for people under 65 as previously planned.

HMRC explains the relevant rules in its guidance on tax on savings interest.

What does the property income tax increase mean for landlords?

Landlords receiving taxable rental income are also affected by the higher property income tax rates. From April 2027, the separate basic, higher and additional property rates will be 24%, 44% and 49% respectively in England, Wales and Northern Ireland.

The effect on an individual landlord will depend on their taxable rental profit, other income and the reliefs available to them. The increase does not mean that the new rate is applied to the entire rent received. Allowable expenses and relevant tax rules must be taken into account when calculating taxable property income.

Landlords should also be aware that mortgage interest relief for residential property businesses operates under specific rules. For eligible individual landlords, finance costs generally receive a basic-rate tax reduction rather than being deducted directly from rental income. The new property basic rate is therefore relevant to understanding the future tax treatment of those costs.

For landlords with substantial rental income, reviewing cash flow and the overall return from a property may be worthwhile. However, tax is only one part of that decision. Mortgage costs, maintenance, periods without tenants and longer-term plans should also be considered.

The government's guidance on tax when you rent out a property provides further information about reporting rental income and understanding the rules.

Will everyone pay more tax after Budget 2026?

No. The changes affect people with taxable savings or property income, and the impact depends on their circumstances. If your savings interest is covered by tax-free allowances, or your savings are held in tax-efficient accounts such as ISAs, the increase may have little or no direct effect on that income.

Likewise, owning a property does not automatically mean you will pay more tax. The relevant issue is whether you receive taxable property income and how much taxable profit you make.

The government has indicated that 84% of income taxpayers will be unaffected by the savings and property income tax changes. This reflects the fact that many people do not have taxable income of these types above the relevant allowances.

It is important to distinguish the tax rate from the amount of income subject to tax. A higher rate does not necessarily mean a large increase in your overall tax bill, particularly if only a relatively small amount of income is taxable.

Frequently asked questions about Budget 2026

When do the savings and property tax increases start?

The new rates are due to take effect from 6 April 2027, at the start of the 2027/28 tax year.

Are savings tax rates increasing by four percentage points?

Yes. Budget 2025 announced an initial two-percentage-point increase, and Budget 2026 adds a further two percentage points from April 2027. The combined increase is four percentage points compared with the previous rates.

Will Cash ISA savings be affected?

Interest earned within a Cash ISA remains tax-free under the applicable rules. Budget 2026 also confirms that the annual Cash ISA limit will remain at £20,000.

Should landlords review their finances before April 2027?

Landlords may wish to review projected rental profits, mortgage costs and cash flow to understand the potential impact. The right approach depends on individual circumstances, so regulated financial or tax advice may be helpful.

What should you do next?

The Budget 2026 savings and property tax changes mean that some people will need to account for higher tax on savings interest or rental income from April 2027. Understanding how much of your income is taxable, which allowances apply and how your savings are held can help you plan ahead.

There is no single response that will suit everyone. If you would like to review how your savings, investments or property income fit into your wider financial plans, you can find out more through Independent Financial Advisers | Castle Stonebridge Financial Planning.

Disclaimer* The benefits to the treatment of tax will depend on your individual circumstances and may be subject to change in future.