· 3 min read
Savings and property income tax rises from April 2027
From 6 April 2027, tax on savings interest and rental profits rises to 22%, 42% and 47%. Worked examples show the cost and the steps to take before then.
The Budget 2025 created separate tax rates for savings interest and property income, set 2 percentage points above the rates on earnings. They take effect from 6 April 2027, so there are six months left of the current rates.
The new rates
| Band | Now (2026/27) | From 6 April 2027 |
|---|---|---|
| Basic rate | 20% | 22% |
| Higher rate | 40% | 42% |
| Additional rate | 45% | 47% |
The same rises apply to property income. The allowances are unchanged:
- Personal Savings Allowance: £1,000 for basic rate taxpayers, £500 for higher rate, nothing for additional rate.
- Starting rate for savings: up to £5,000 at 0%, reduced by £1 for every £1 of other income above your Personal Allowance.
- Property allowance: £1,000 of gross rent, if you choose it instead of claiming expenses.
Income tax thresholds stay frozen, so the bands themselves do not move.
What it costs savers
These examples use 2026/27 tax and apply the new rates to the same income.
| Saver | Interest | Tax now | Tax from April 2027 | Extra |
|---|---|---|---|---|
| £30,000 salary | £2,000 | £200 | £220 | £20 |
| £60,000 salary | £3,000 | £1,000 | £1,050 | £50 |
The basic rate taxpayer pays tax on the £1,000 above their allowance. The higher rate taxpayer pays tax on the £2,500 above their £500 allowance.
With interest rates where they are, many people with modest savings outside an ISA have already started paying tax on interest. The rate rise adds to that.
What it costs landlords
Rental profit is taxed as part of your income, on top of any salary.
| Landlord | Rental profit | Tax on rental profit now | From April 2027 | Extra |
|---|---|---|---|---|
| £30,000 salary, £14,000 rent, £4,000 costs | £10,000 | £2,000 | £2,200 | £200 |
| £60,000 salary, £20,000 rent, £5,000 costs | £15,000 | £6,000 | £6,300 | £300 |
Residential landlords still cannot deduct mortgage interest from rental profit. They get a tax credit instead, which already leaves higher rate landlords paying tax on money that goes to the lender.
If you live in Scotland or Wales, check the latest guidance on how the new property rates apply alongside your devolved rates on earnings.
ISA changes at the same time
From April 2027 the cash ISA limit for people under 65 falls to £12,000, inside the overall £20,000 ISA allowance. People aged 65 and over keep the full £20,000 for cash. If you rely on cash ISAs to shelter interest, the 2026/27 allowance is the last one at the full amount.
Ways to prepare
- Fill this year's ISA allowance. Interest inside an ISA is tax-free and does not use your Personal Savings Allowance.
- Use a partner's allowances. A basic rate partner has a £1,000 allowance and pays 20%, rising to 22%, on interest above it. Moving savings to them can cut the bill.
- Check your pension. Paying into a pension can keep you in the basic rate band, which doubles your Personal Savings Allowance.
- Landlords: review ownership and structure. Joint ownership with a lower earning partner, and in some cases holding property through a company, can change the tax position. Both have costs and legal effects, so take advice before acting.
- Check if Making Tax Digital applies. Landlords with more than £30,000 of gross rent and self-employed income must use MTD from April 2027 too.
What to do now
- Add up the interest you expect this year from accounts outside ISAs.
- Put your salary, interest and rental figures into our calculator to see your current bill and how much falls in each band.
- Use your 2026/27 ISA allowance before 5 April 2027.
- Landlords should check their gross income against the MTD threshold and choose software now.