Budget 2025: income tax rates on income from property, savings and dividends

In the 2025 Budget the Chancellor Rachel Reeves announced three changes to the rates of income tax:

• The introduction of new separate tax rates for property income. These new rates will apply from April 2027. The property basic rate will be 22%, the property higher rate will be 42%, and the property additional rate will be 47%.
• An increase in the tax rate on savings income from April 2027. The rates will be increased by 2 percentage points across all income tax bands.
• An increase in the ordinary and upper rates of tax on dividend income from April 2026. These rates will be increased by 2 percentage points, though the dividend additional rate will be unchanged.

Taken together these changes are forecast to raise around £2.3 billion a year in the three years 2028/29 to 2030/31.

Provision to implement these three measures is included in the Finance Act 2026; specifically section 6, section 7, and schedule 1 (new rates of tax on property income), section 5 (the increase in saving income rates), and section 4 (the increase in dividend income rates).

Both savings and dividend income are taxed on a UK-wide basis. The new rates of tax on property income will apply in England, Wales and Northern Ireland. The government has stated it 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.

Provision for Scottish and Welsh property rates to be set by the Scottish Parliament and Senedd is made by section 8 and schedule 2 of the Finance Act 2016.