The Chancellor’s 2025 Budget introduces major reforms to personal taxation, with a clear focus on property income, dividends, and savings. These changes will impact landlords, investors, and savers over the next two years.
Here’s what you need to know:
1. Dividend Tax Rates Increasing (from April 2026)
Dividend income will also see a rise in tax rates, with the ordinary and upper rates increasing by 2 percentage points:
- Ordinary Rate: currently 8.75% – from April 2026 10.75%
- Upper Rate: currently 33.75% – From April 2026 35.75%
- Additional Rate: Currently 39.35% – from April 2026 there is no 2% uplift on the additional rate.
2. New Separate Tax Rates for Property Income (from April 2027)
The government is introducing a distinct tax regime for property income, moving away from alignment with standard income tax rates. From April 2027, the following rates will apply:
- Property Basic Rate: 22%
- Property Higher Rate: 42%
- Property Additional Rate: 47%
This represents a significant increase compared to current rates and will particularly affect higher-rate taxpayers with rental portfolios.
3. Savings Income Tax Rates Rising (from April 2027)
From April 2027, all bands of savings income tax will increase by 2 percentage points. This will affect interest earned on savings accounts and other taxable savings products.
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