Dividend Tax Rising in April 2026: Savings Tax Follows in 2027
By calculatemysalary.co.uk Editorial Team
Dividend tax rates rise by 2 percentage points from April 2026. Savings and property income tax increases follow a year later in April 2027. Here are the new rates and how to plan.
The government's coming for investment income. Dividends first — April 2026. Savings and rental income — April 2027. If you've got money sitting in stocks or bonds or earning interest outside an ISA, you're about to pay more tax on it. Not huge amounts individually, but enough to notice. And if you've got multiple income streams, they stack.
New Dividend Tax Rates from April 2026
| Tax Band | Current Rate | Rate from April 2026 |
|---|---|---|
| Basic rate (£12,571–£50,270) | 8.75% | 10.75% |
| Higher rate (£50,271–£125,140) | 33.75% | 35.75% |
| Additional rate (over £125,140) | 39.35% | 39.35% (no change) |
The £500 dividend allowance remains unchanged. You still pay no tax on the first £500 of dividend income each year.
Who is affected?
- Limited company directors who pay themselves partly in dividends.
- Investors holding shares outside an ISA or pension.
- Anyone whose dividend income exceeds the £500 allowance.
What this actually costs you
Say you're a higher-rate taxpayer and you get £10,000 in dividends (above your £500 allowance). Currently: £3,375 in tax. April 2026? £3,575. That's £200 straight out. If you're a basic-rate taxpayer on the same £10,000, it's £190. For someone living on dividends, that adds up fast.
New Savings and Property Income Tax Rates
From 6 April 2027, tax rates on savings income (UK-wide) and property income (England, Wales, and Northern Ireland) each rise by two percentage points:
| Tax Band | Current Rate | Rate from April 2027 |
|---|---|---|
| Basic rate | 20% | 22% |
| Higher rate | 40% | 42% |
| Additional rate | 45% | 47% |
The Personal Savings Allowance is unchanged: £1,000 for basic-rate taxpayers, £500 for higher-rate taxpayers, and £0 for additional-rate taxpayers. The £5,000 starting rate for savings also remains.
Who is affected?
- Savers earning interest above their Personal Savings Allowance.
- Landlords with property income in England, Wales, or Northern Ireland.
- Higher earners who are already above their savings allowance.
What to Do Before April
Max out your ISA — you get £20,000 this year and next. Interest and dividends inside are completely tax-free. If you hold dividend stocks or savings outside an ISA, move them in before April.
If you're a company director, the higher dividend rates might change whether salary or dividends make more sense — salary costs you employer NI but you can pension it; dividends are now more expensive. Do the math for your situation.
Landlords: make sure you're claiming all your expenses — mortgage interest relief, repairs, letting fees.
And pensions remain your best defense. Contributions get tax relief at your top rate, which directly offsets higher tax on investment income.
One more thing: from April 2027, the cash ISA limit drops to £12,000 for under-65s. So the next two years are your last chance at £20,000 in cash ISAs. Use it.
Why This Matters
If you're employed, this doesn't touch your main income. But if you've got side income — shares, rental property, savings — this stings. Add it to frozen thresholds squeezing employment income, and you're in a pincer. The government's systematically making non-employment income more expensive.
The play: move what you can into ISAs and pensions. Those wrappers are becoming less of a nice-to-have and more of a necessity.
What to Do
The 2pp increases on dividends, savings, and property income don't look huge alone, but they pile on top of frozen thresholds and shrinking allowances. Your best defence is using tax-free wrappers — ISAs and pensions — while you still can.