Savings and Rental Income Tax Rates 2027/28 Explained

The short version

From 6 April 2027 savings and property income are announced to be taxed at 24%, 44% and 49%, up from 20%, 40% and 45%.
Wages, pensions and self-employed profit keep the main 20%, 40% and 45% rates.
The Personal Savings Allowance, the 0% starting rate for savings and the £1,000 property allowance are not announced to change.
A basic-rate taxpayer pays 4p more tax on every £1 of taxable interest or rental profit.
Property rates are stated for England, Wales and Northern Ireland. Scotland and Wales can set their own.

What is changing?

From 6 April 2027, the Budget on 28 October 2026 announced new Income Tax rates for savings and for property income: 24% for basic-rate taxpayers, 44% for higher-rate and 49% for additional-rate. Today savings are taxed at 20%, 40% and 45%, and rental profit is taxed at the same main rates as your wages. All of this is announced and subject to legislation.

Band	2026/27	2027/28 savings and property (announced)	2027/28 wages and self-employed profit
Basic	20%	24%	20%
Higher	40%	44%	40%
Additional	45%	49%	45%

The new rates are stated for England, Wales and Northern Ireland. Scotland and Wales have been given powers to set their own property rates, so those could differ.

What stays the same?

Personal Allowance of £12,570, tapered away above £100,000.
Starting rate for savings: 0% on up to £5,000 of savings interest, reduced pound for pound by your other taxable income above the Personal Allowance.
Personal Savings Allowance: £1,000 for basic-rate taxpayers and £500 for higher-rate taxpayers, none for additional-rate.
Property allowance: £1,000, used instead of deducting actual rental costs.
Rent a Room: tax-free rent from a lodger, unchanged according to the technical note.

The order your income is taxed

HMRC taxes your income in a set order: wages, pensions and self-employed profit first, then property income, then savings, then dividends. Your Personal Allowance is used against the first group. Because savings and rental profit sit on top, they are more likely to fall into the higher-rate band.

Savings and Rental Income Tax Calculator

Enter your income, rent and interest to see both tax years side by side.

Open the calculator

Worked example: a saver

Alex earns £30,000 and has £4,000 of savings interest. After the Personal Allowance, other income is £17,430, which uses up the starting rate for savings. The £1,000 Personal Savings Allowance covers the first £1,000 of interest, leaving £3,000 to tax.

2026/27: £3,000 × 20% = £600.
2027/28 (announced): £3,000 × 24% = £720.

That is £120 more.

Worked example: a landlord

Jo earns £30,000 and rents out a flat for £12,000 with £3,000 of costs. Rental profit is £9,000. Everything stays in the basic-rate band.

2026/27: £9,000 × 20% = £1,800.
2027/28 (announced): £9,000 × 24% = £2,160.

That is £360 more. If Jo had no costs, the £1,000 property allowance would give a profit of £11,000.

Worked example: a higher-rate taxpayer

Chris earns £60,000, has £3,000 of savings interest and £6,000 of rent with no costs. The savings allowance is £500 for a higher-rate taxpayer, so £2,500 of interest is taxed. The £1,000 property allowance leaves £5,000 of profit.

Savings: £2,500 × 40% = £1,000 in 2026/27, and × 44% = £1,100 in 2027/28.
Rental profit: £5,000 × 40% = £2,000, and × 44% = £2,200.

Who should do something?

Nobody needs to act before April 2027. If you hold a lot of savings outside an ISA, check what your ISA allowance could shelter. If you are a landlord, the rise is on profit, not rent, so keep your costs records tidy. If you also run a business, see what the Budget means for the self-employed and our guide to how much tax to put aside.

What we have not modelled

Mortgage interest relief for landlords, Scottish property rates, Welsh property rates (we assume the UK rates and say so), rental losses and dividends. Property rates for Scotland and Wales could differ when they are announced.

Questions people ask

What are the savings tax rates in 2027/28?

24% basic, 44% higher and 49% additional, announced on 28 October 2026 for savings income from 6 April 2027. They are 20%, 40% and 45% in 2026/27. The rise is subject to legislation.

Does this affect ISAs?

No. Interest and income inside an ISA is tax-free and is not part of this change.

Do I pay the new rate on all my interest?

No. First your Personal Allowance, the 0% starting rate for savings (up to £5,000, less other income) and your Personal Savings Allowance are taken off. The new rate applies only to interest above those.

Does the £1,000 property allowance still apply?

The GOV.UK technical note says the property allowance is unchanged. You can use it instead of deducting your actual rental costs if that gives a lower profit.

Do these rates apply in Scotland?

Scotland has its own Income Tax bands and has been given the power to set its own property rates. We have not seen Scottish property rates announced, so our calculator does not cover Scotland.

Will landlords with a mortgage pay more?

Possibly. Finance costs on residential lets are handled through a separate tax credit and we have not modelled it. Landlords with a mortgage should expect the calculator to overstate the tax.

Do dividends change?

Dividend rates were announced as 10.75%, 35.75% and 39.35% with a £500 allowance. They are a separate change and not part of the calculator.

Sources

Checked against the sources below on 28 October 2026. The 2027/28 figures are announced, not law yet, so we will update this guide when the legislation is published.