Budget 2025 tax changes: key dates and what they mean for you

The Autumn Budget 2025 tax changes introduced several targeted rate rises on income, particularly on dividends, savings interest and rental property income. Understanding them is essential, as you’ll need to know not just how much the rates are going up, but when the higher rates will actually start to bite.

In this article, you’ll find a clear summary of the main changes and what they mean for savers, business owners, landlords and employees. For a broader overview of all Budget changes, take a look at the summary we’ve prepared here.

1. At a glance: a timeline of key rate rises

2. Dividend income: rate rise from April 2026

What’s changing?

The government is increasing dividend tax rates at the basic and higher rate bands by 2 percentage points from 6th April 2026. The additional rate stays where it is.

From 6th April 2026 (2026/27 tax year):

• Ordinary rate (within basic rate band): 10.75% (up from 8.75%)
• Upper rate (within higher rate band): 35.75% (up from 33.75%)
• Additional rate: remains at 39.35%

It’s also worth noting that the dividend allowance (0% band) remains unchanged at £500 from 6th April 2026.

Key timing points

• Before 6th April 2026: dividends are taxed at the current 8.75% / 33.75% / 39.35% rates (after your £500 allowance).
• On or after 6th April 2026: dividends in the basic or higher rate bands are taxed at the higher 10.75% and 35.75% rates.

Planning thoughts

• Company owners may want to review the timing of dividends around 2025/26 vs 2026/27, balancing:
  • the lower pre-2026 rates, against
  • their overall income levels, cash needs and long-term extraction strategy.
• Ensure any acceleration of dividends doesn’t push you into the additional rate band or trigger other knock-ons. These could include pushing you into the tapered additional rate personal allowance, loss of Child Benefit or the High Income Child Benefit Charge.

3. Savings income: rate rise from April 2027

What’s changing?

From 6th April 2027, the tax rates applied to taxable savings income (interest on bank accounts, some bonds outside ISAs) increase by 2 percentage points in all three main bands.

The new rates for savings income from the tax year 2027/28 will be:

• Basic rate savings tax: 22%
• Higher rate savings tax: 42%
• Additional rate savings tax: 47%

Crucially, HMRC confirms that this measure applies only to taxable savings income – interest inside ISAs, or interest covered by the Income Tax Personal Allowance, Personal Savings Allowance or Starting Rate for Savings remains protected.

Allowances and bands

These are the allowance and bands.

• Personal Savings Allowance stays at:
  • £1,000 for basic rate taxpayers
  • £500 for higher rate taxpayers
  • £0 for additional rate taxpayers
• The Starting Rate for Savings continues to offer up to £5,000 of interest at 0%, where non-savings, non-dividend income is low enough.

At the same time, the overall Income Tax thresholds are frozen until April 2031, meaning more people are gradually pulled into higher bands and lose some or all of these allowances.

ISA and Help to Save changes that interact with this

The Budget also changes how some tax-advantaged savings work:

• Cash ISA limit for under-65s will fall to £12,000 from April 2027, although the overall £20,000 ISA limit remains, so up to £8,000 must go into non-cash (e.g. stocks & shares ISAs) for that group.
• Over-65s retain a £20,000 cash ISA limit.
• The Help to Save scheme becomes permanent and is broadened to more Universal Credit claimants.

Given rising tax rates on savings, maximising the use of ISAs and Help to Save becomes more important.

Key timing points

• Up to 5th April 2027: savings income above the allowances taxed at 20% / 40% / 45%.
• From 6th April 2027: the higher 22% / 42% / 47% rates apply to taxable savings income.

4. Rental property income: new “property income” rates from April 2027

What’s changing?

For unincorporated landlords (individuals and partnerships), the government is creating separate tax rates specifically for property income. From 6th April 2027, property income will no longer simply follow the main Income Tax rates – it will be subject to its own higher scale of rates.

For England and Northern Ireland, from tax year 2027/28, the property income rates will be:

• Property basic rate: 22%
• Property higher rate: 42%
• Property additional rate: 47%

This represents a 2 percentage point increase at each band compared with the underlying Income Tax rates.

Finance cost relief (tax credit for mortgage interest) will be given at the separate property basic rate (22%) once that comes in. This is because it will no longer be pegged at the basic Income Tax rate.

Scotland and Wales will have powers to set their own property income rates, so landlords there will need to keep an eye on their devolved budgets. HMRC says: “The government will engage with the devolved governments of Scotland and Wales to provide them with the ability to set property income rates in line with their current Income Tax powers in their fiscal frameworks. This will take effect from 6 April 2027.”

Property income ordering and allowances

The Budget also tweaks the ordering rules for how your Personal Allowance is set against different types of income from April 2027. The allowance will first be set against earned income, trading profits or pensions, before savings or property income.

In practice, this means:

• If your salary/pension already uses up your Personal Allowance, you’re less likely to have that allowance available to offset savings or property income.
• The new, higher property rates will more often apply to the full amount of taxable rental profits.

Key timing points for landlords

• 2025/26 and 2026/27 tax years: rental income taxed at the usual 20% / 40% / 45% rates, with existing restrictions on finance cost relief.
• From 2027/28 onwards, higher 22% / 42% / 47% property income rates apply to relevant property profit (outside companies) in England and Northern Ireland.

This gives landlords a window of two tax years (2025/26 and 2026/27) to consider restructuring, incorporation or other planning before the new property rates bite.

5. Other important personal tax changes affecting these incomes

Income Tax thresholds frozen to 2031

The Personal Allowance and main Income Tax bands are now frozen until 5th April 2031.

• Personal Allowance remains £12,570.
• Main bands remain at 20% / 40% / 45%, with the higher rate band still starting at £50,271 and the additional rate at £125,141 (outside Scotland).

Although this isn’t a rate rise in itself, it pulls more people into higher bands over time, amplifying the impact of the dividend, savings and property rate increases.

Pension salary sacrifice: NIC cap from April 2029

From 6th April 2029, there will be a new cap on the amount of pension contributions that can benefit from NIC relief via salary sacrifice.

• Only the first £2,000 a year of salary-sacrificed pension contributions per employee will be exempt from Class 1 employee and employer NICs.
• Employee and employer NICs will apply to salary-sacrificed contributions above £2,000.
• Income Tax relief on pension contributions continues as normal (subject to existing allowances).

This change is a bit further in the future (it’s effective from the 2029/30 tax year), but it could be significant if you’re a higher earner or employer who currently uses salary sacrifice heavily.

Capital Gains Tax – Business Asset Disposal Relief and EOTs

Two CGT changes sit alongside the Autumn Budget 2025 tax changes and  these may be relevant if you are are planning exits alongside income strategies:

1. Business Asset Disposal Relief (BADR)
   • The rate on qualifying gains moves from 14% to 18% for disposals on or after 6th April 2026.
   • This was previously announced, but the Budget and HMRC’s manuals now confirm the timing, and it is approaching fast.
2. Employee Ownership Trust (EOT) disposals
   • For qualifying disposals of shares to EOTs, only 50% of the gain will be immediately relieved from CGT. The remaining 50% becomes chargeable straight away, and the relieved portion becomes a held-over gain that is taxed if the EOT later disposes of the shares.
   • Effective from 26th November 2025 (Budget day), confirmed in both the HMRC policy note and the official costings.

Anyone considering a business sale, management buy-out or EOT structure now has much tighter CGT parameters to work within.

6. What should you be doing now?

Every client’s position is different, but the direction of travel is clear: income that doesn’t bear National Insurance – dividends, savings interest and rental profits – will be taxed more heavily over the second half of this decade.

Here are some key points you might want to discuss with your account manager so they can be tailored to your situation.

Company owners

• Review your dividend strategy over 2025/26 and 2026/27 in light of the 2026 rate rise.
• Consider balancing:
  • bringing forward some dividends into 2025/26,
  • against the impact on higher/additional rate bands and other thresholds.
• Look at whether more profits should be retained for pension contributions, especially before the 2029 salary sacrifice NIC cap.

Savers and investors

• Make full use of ISA allowances (and, where applicable, Help to Save) ahead of the April 2027 changes to the cash ISA cap for under-65s.
• Check how much of your interest is covered by:
  • the Personal Savings Allowance, and
  • the Starting Rate for Savings if your earned income is relatively low.
• Consider whether certain types of interest-bearing assets should be held inside an ISA rather than outside, given the future 22% / 42% / 47% savings rates.

Landlords

• Model your after-tax rental return now vs 2027/28, when 22% / 42% / 47% property income rates and the ordering rule change both take effect.
• Consider options such as:
  • transferring properties between spouses (where appropriate),
  • incorporating the rental business, or
  • restructuring borrowing,

Only do these things after detailed advice – each has commercial, legal and tax consequences.

For business owners planning an exit

• If BADR is likely to apply, factor in the move from 14% to 18% on 6th April 2026 when assessing potential deal timing.
• If you’re exploring an Employee Ownership Trust, be aware that the full CGT exemption has effectively gone from 26th November 2025.

7. How THP can help

The Autumn Budget 2025 tax changes are deliberately phased in over several tax years. If you want to turn the Budget 2025 tax changes into opportunities, it’s important that your planning aligns with the actual dates the new rates start.

THP’s tax team can help you:

• Map the Budget 2025 tax changes against your dividend, savings and rental income over the coming years.
• Decide whether to re-time income, restructure your affairs or use more tax-advantaged wrappers.
• Work alongside your financial adviser and solicitor on exit planning where CGT changes (BADR and EOTs) are relevant.

If you have questions about how these changes might impact your finances, please contact your THP account manager or get in touch using the form below.