Savings and property income tax changes: What to expect from April 2027

Savings and property income tax changes: What to expect from April 2027
Savings and property income tax changes: What to expect from April 2027

Individuals with savings or property income should be aware of changes to income tax rates, due to take effect from 6 April 2027.

From this date, tax rates on savings interest and property income will increase to:

  • 22% (basic rate)
  • 42% (higher rate)
  • 47% (additional rate)

While the structure of taxation remains the same, the increase in rates represents a continued shift in the tax landscape, placing greater weight on investment and passive income.

A continued shift in how investment income is taxed

For many individuals, savings interest and rental income form a key part of their overall financial position.

Historically, these income streams have been subject to income tax at standard rates, with allowances and reliefs helping to reduce the overall burden. However, recent years have seen a gradual tightening of this position.

The increase from April 2027 builds on that trend.

For landlords, this comes alongside other changes in recent years, including restrictions on mortgage interest relief, meaning the overall tax efficiency of property investment has reduced over time.

For those with savings outside of tax-efficient wrappers, the change will increase the cost of holding income-generating assets in a personal capacity.

What this means in practice

While the increase in rates is clear, the impact will vary depending on how income is structured.

In practical terms:

  • Landlords may see reduced net returns on rental income
  • Individuals with significant savings may face higher tax on interest
  • Higher and additional rate taxpayers are likely to feel the greatest impact
  • The difference between holding assets personally versus within structures (e.g. companies or wrappers) may become more pronounced

For some, this may prompt a review of how assets are held, particularly where income is approaching higher rate thresholds.

For others, the focus may shift towards making greater use of available allowances and tax-efficient vehicles.

A more considered approach to income and asset structuring

This change reinforces the importance of taking a more structured approach to investment and income planning.

Decisions such as:

  • Whether to hold property personally or within a company
  • How savings are allocated across accounts or family members
  • The use of ISAs and other tax-efficient wrappers
  • Timing of income recognition

may have a more noticeable impact as tax rates increase.

At Ward Williams, we work with individuals, landlords and families to ensure that income is structured efficiently, balancing tax considerations with commercial and personal objectives.

Timing and forward planning

Although the changes take effect from April 2027, there is an opportunity to review arrangements ahead of time.

This may include:

  • Assessing projected income across tax bands
  • Reviewing ownership structures
  • Considering whether any changes should be made in advance of the new rates
  • Aligning investment strategy with long-term financial goals

As with many tax changes, the key is not simply reacting at the point of implementation, but understanding how the change fits into your wider financial picture.

Frequently asked questions

What is changing?
Income tax rates on savings interest and property income are increasing from April 2027.

Who is affected?
Landlords and individuals with taxable savings income outside of tax-free wrappers.

Does this apply to ISAs?
No, income within ISAs remains tax-free.

Will this affect all landlords?
Yes, where rental income exceeds allowances and falls within taxable bands.

Are higher earners more affected?
Yes, the increase in higher and additional rates will have a greater impact on those already in those bands.

Should I consider restructuring my investments?
Possibly. This will depend on your overall financial position and objectives.

Is this change part of a wider trend?
Yes, it reflects a continued shift towards increased taxation of investment income.

As tax on savings and property income increases, taking a more proactive and structured approach to managing income will become increasingly important.

If you would like to understand how these changes may affect your position, please get in touch.

Call 01932 830664, email enquiries@wardwilliams.co.uk or visit www.wardwilliams.co.uk to speak with a member of the team.

Personal Tax