The Autumn Budget 2026 saw further increases to the Income Tax rates applying to property and savings income from 6 April 2027. In this article, Daniel Iles explains who will be affected and why the changes should prompt landlords, savers and trustees to review their existing arrangements. 

The Chancellor announced that the Income Tax rates applying to property and savings income will rise to 24%, 44% and 49% for basic, higher and additional rate taxpayers respectively from 6 April 2027. These increases go further than the changes announced at Autumn Budget 2025, when the corresponding rates for 2027/28 were set at 22%, 42% and 47%. 

The revised rates are: 

The savings income rates will apply across the UK. The property income rates will apply in England, Wales and Northern Ireland, although the Scottish and Welsh governments have been given the ability to set their own property income rates in line with their existing Income Tax powers.  

The 0% starting rate for savings and its £5,000 limit remain unchanged.  

What do the changes mean for landlords? 

Landlords holding property personally are likely to be among those most immediately affected. 

An individual with £10,000 of taxable rental profit will pay £400 more in Income Tax in 2027/28 than they would at the current rates. For landlords with larger portfolios, the overall increase could be considerably more significant.   

Landlords should therefore consider whether personal ownership remains the most appropriate structure for their property investments. 

Will holding property through a company become more attractive? 

No further changes to dividend tax rates were announced in this Budget, widening the difference between the tax treatment of property income received personally, and profits extracted from a company as dividends.   

Companies can also generally deduct qualifying mortgage interest when calculating taxable rental profits. By contrast, individual residential landlords usually receive a basic-rate tax reduction for their finance costs rather than a full deduction from rental income. 

A company structure can provide greater control over the timing of personal income, because shareholders can decide when dividends are paid. This may be helpful where profits are being retained for future investment rather than immediately extracted. 

However, incorporation will not be right for everyone. Transferring an existing property portfolio into a company can trigger Capital Gains Tax and Stamp Duty Land Tax. The company may then pay Corporation Tax on its profits, with further personal tax potentially arising when funds are extracted. 

The benefits will depend on factors including the landlord’s borrowing position, future investment plans, existing gains and losses and the amount of income they need to withdraw. It is therefore important to consider the complete tax position rather than comparing headline Income Tax rates alone. 

What do the changes mean for savers? 

From April 2027, interest falling outside an individual’s available Personal Savings Allowance or other tax-free allowances will be taxed at the new savings income rates. The increase will further widen the difference between the taxation of interest and dividend income.  

People with significant cash deposits should review how much interest they are likely to receive across their accounts and whether they are making effective use of available tax-efficient wrappers and allowances. If savings returns increase, more people could find that their interest exceeds their Personal Savings Allowance. 

What is the potential impact on trustees? 

The changes may also have consequences for UK resident discretionary trusts. 

Income distributions from these trusts are treated as being paid net of a 45% tax credit. Where trustees mainly receive dividend income taxed at lower rates, this can create a shortfall between the tax paid by the trustees and the tax credit attached to distributions, potentially resulting in an additional charge on the trustees. 

The new 49% rate for property income may help offset that imbalance where a trust receives a mixture of property and dividend income. However, a trust receiving only or mainly property income may be unable to make full use of the tax it has paid when distributing income to beneficiaries, because the 49% property income rate will be higher than the 45% tax credit attached to the distribution.  

Trustees should therefore consider how the trust’s mix of income could affect both its immediate tax liabilities and its ability to make future distributions tax-efficiently. 

What should you do now? 

The new rates are due to take effect from 6 April 2027, providing a window in which affected taxpayers can understand the likely impact and review their arrangements.  

For landlords, this could include modelling the difference between personal and company ownership, taking account of financing costs, future property purchases, profit extraction and the potential tax cost of transferring existing properties. 

Savers may want to review the distribution of cash deposits, their expected interest income and their use of available allowances and tax-efficient investments.  

Trustees should consider the trust’s anticipated income profile and how the higher property income rates could affect future distributions. 

Any restructuring should be based on an individual’s wider objectives. The immediate tax saving is only one part of the decision, particularly where transferring assets could create significant upfront tax costs. 

How we can help 

Our Private Client team can help you understand how the new rates may affect your property income, savings or trust arrangements. We can model the potential tax impact, assess the advantages and disadvantages of different ownership structures, and help you decide whether any action is appropriate before the changes take effect. Fill in the form below and one of our experts will be in touch.