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Big Changes Ahead for Property and Savings Income Tax: What You Need to Do

The Autumn Budget introduced major reforms to how property income and savings income will be taxed in the coming years. These changes will significantly affect landlords, investors, and anyone with substantial non-employment income. Here’s what’s changing and what you should do now.
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What’s Changing?
From April 2027, property and savings income will be taxed at higher rates than general income:
• Basic Rate: 22% (up from 20%)
• Higher Rate: 42% (up from 40%)
• Additional Rate: 47% (up from 45%)
This applies to:
• Rental income from property.
• Interest from savings accounts.
• Certain investment income not covered by dividend rules.
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Why This Matters
• Landlords: Higher tax on rental profits means reduced net income.
• Investors: Interest-bearing accounts and bonds will yield less after tax.
• Cash-rich individuals: Holding large sums in savings accounts becomes less attractive.
Combined with frozen personal allowances until 2031, more taxpayers will be pushed into higher bands, increasing the impact of these changes.
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What You Should Do Now
1. Review Your Property Portfolio
o Consider restructuring ownership (e.g., via a company) to benefit from corporation tax rates and allowances.
o Explore timing of repairs and capital improvements for maximum tax efficiency.
2. Reassess Savings Strategy
o Use tax-free wrappers like ISAs and pensions to shelter interest income.
o Consider moving funds into investments with better tax treatment.
3. Plan Ahead for Cash Flow
o Factor in higher tax bills from April 2027.
o Adjust rental pricing or investment returns to maintain profitability.
4. Seek Professional Advice
o Every situation is different—our team can model the impact and recommend tailored solutions.
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Next Steps
Don’t wait until 2027—early planning can save thousands.
Book a Tax Planning Review with Our Team
We’ll help you restructure your property and savings strategy to minimise tax and maximise returns.