Changes to Income Tax on Savings & Rental income
From 6th April 2027 the tax rates for income tax on savings will be increasing, these new rates will also apply to rental income. The basic, higher and additional rates will be increasing to 24%, 44% and 49% respectively, which are two percentage points higher than the rates announced in the 2025 budget.
The Personal Savings Allowance remains unchanged, at £1,000 for basic rate taxpayers and £500 for higher rate tax payers.
While this will not be have a large effect on most business owners, as general savings income for the average business owner will not be massive and therefore the increased tax won’t be too much to deal with. However, for anyone with rental the increased tax rates will put additional pressure on their business.
Income & Dividend Rate Changes
In general, the income and dividend rates have remained unchanged from the previous budget, with the personal allowance basic rate band freeze remaining in place until April 2031.
The corporation tax main rate of 25% has also remained unchanged, with the 19% small profits rate and marginal relief continuing.
Overall, there is not a lot to unpack over the tax rates and bands. However, with the continued freeze in the personal allowance and basic rate more people will be dragged into higher tax bands, this is both business owner and employees, meaning that a lot of people will continue to feel the pinch.
