In this guide
The Budget on 28 October 2026 announced that tax rates on property income and savings interest will go up by a further 2 percentage points from April 2027, on top of the rise that was already set. This guide covers the rates now and later, what is already law, and how it may affect you.
Quick answer
- From 6 April 2027, tax rates on property income and savings interest are set to rise to 24%, 44% and 49% (basic, higher and additional rate).
- 22%, 42% and 47% were set at Budget 2025 and are already law. The extra 2 percentage points were announced at Budget 2026 and still need Finance Bill 2026-27 to pass.
- The 2026 to 2027 tax year (to 5 April 2027) isn't affected.
- The Personal Allowance, the £5,000 starting rate for savings and the Personal Savings Allowance don't change.
- The cash ISA limit isn't being cut: it was due to fall to £12,000 from April 2027, but it will now stay at £20,000 a year.
How the rates change
In the tables below, "Now" is the 2026 to 2027 tax year. "Already law" and "Proposed" (Budget 2026) are the rates from 2027 to 2028.
Property income (England, Wales and Northern Ireland)
| Your tax rate | Now | Already law | Proposed |
|---|---|---|---|
| Basic rate | 20% | 22% | 24% |
| Higher rate | 40% | 42% | 44% |
| Additional rate | 45% | 47% | 49% |
Savings interest (across the UK, including Scotland)
| Your tax rate | Now | Already law | Proposed |
|---|---|---|---|
| Basic rate | 20% | 22% | 24% |
| Higher rate | 40% | 42% | 44% |
| Additional rate | 45% | 47% | 49% |
- In 2026 to 2027, property income is taxed at the main rates of Income Tax. From 2027 to 2028, property income has its own separate rates.
- The Scottish Parliament and the Senedd can set their own rates for property income using their own Income Tax powers.
What is settled and what isn't
- Already law: the Finance Act 2026 sets rates of 22%, 42% and 47% for property income and savings interest from 2027 to 2028.
- Announced but not yet law: Budget 2026 announced a further 2 percentage points, taking the rates to 24%, 44% and 49%. HMRC says this will be in Finance Bill 2026-27. Until Parliament passes it, the law still says 22%, 42% and 47%.
- Cash ISA: a law made in September 2026 cut the cash ISA limit to £12,000 a year from 6 April 2027 for people aged 64 or under at the end of the tax year. Budget 2026 decided not to cut it: it stays at £20,000 for everyone over 18, with the regulations to be laid before Parliament in November 2026.
- Tax reduction for mortgage interest: it's worked out at 20% now. The Finance Act 2026 says it will be worked out at the "property basic rate" from 2027 to 2028, which HMRC said would be 22%. If 24% becomes law, the way the law is written suggests the reduction would follow. However, the Budget 2026 documents don't say so directly, so wait for the final legislation.
What doesn't change
- Personal Allowance: £12,570
- Starting rate for savings: up to £5,000 (only if your other income is less than £17,570)
- Personal Savings Allowance: £1,000 for basic rate taxpayers, £500 for higher rate taxpayers
- Interest in an ISA stays tax-free
HMRC gives this illustration: a basic rate taxpayer using all of the starting rate for savings and the Personal Savings Allowance would need over £150,000 in savings outside an ISA, earning 4%, before paying any tax on interest.
Examples (worked out using the rates above)
Say your wages are over £17,570 (so the starting rate for savings doesn't apply), and this income doesn't move you into a different tax band.
Landlord: basic rate, rental profit of £10,000 (before the tax reduction for mortgage interest)
| Now | Already law | Proposed | |
|---|---|---|---|
| Tax to pay | £2,000 | £2,200 | £2,400 |
Saver: basic rate, £3,000 of interest a year
- After the £1,000 Personal Savings Allowance, £2,000 is taxed:
- 2026 to 2027: £400 → 2027 to 2028, already law: £440 → proposed: £480
Saver: higher rate, £3,000 of interest a year
- After the £500 Personal Savings Allowance, £2,500 is taxed:
- 2026 to 2027: £1,000 → 2027 to 2028, already law: £1,050 → proposed: £1,100
HMRC estimates that the extra 2 percentage points will mean an average rise of about £225 a year in 2027 to 2028 for landlords affected, and about £113 for savers affected.
Readers ask
I live in Scotland. How does this work for me?
The new savings rates apply across the UK, including Scotland. For property income, the Scottish Parliament can set its own rates, so watch for the Scottish Government's announcement.
Do I need to do anything now?
Tax for 2026 to 2027 doesn't change, so you don't need to act straight away because of this Budget. A few things to keep in mind:
- If you have a lot of savings and your interest is over your allowance, consider using an ISA first: ISA interest is tax-free, and you can still pay up to £20,000 a year into a cash ISA.
- Landlords should keep good records of income, expenses and mortgage interest, and watch for the final legislation on 2027 to 2028 rates and the mortgage interest reduction.
This guide will be updated once Finance Bill 2026-27 passes and the rates are confirmed. For the basic rules on savings interest and rental income, see the guides to savings interest and UK rental income.
Sources checked: 30 October 2026 · Tax year: 2026 to 2027 and 2027 to 2028 · Sources are official GOV.UK and legislation.gov.uk pages.
This is general information, not tax advice for your situation. How it applies depends on your full circumstances.