Budget 2026: what changes for your tax from April 2027
The 28 October 2026 Budget leaves income tax and National Insurance rates alone but raises tax on savings interest and rental income to 24%, 44% and 49% from April 2027. What changes, with examples.
Chancellor John Healey’s first Budget, on 28 October 2026, left the rates of income tax, National Insurance and VAT alone. Most of the changes for individuals start on 6 April 2027, and the biggest is a rise in tax on savings interest and rental income. Here is what changes, who it affects, and what stays the same.
At a glance
| What | 2026/27 | 2027/28 |
|---|---|---|
| Income tax on earnings (England, Wales, NI) | 20%, 40%, 45% | No change |
| Personal allowance and higher-rate threshold | £12,570 and £50,270 | No change, frozen until April 2031 |
| Employee National Insurance | 8% and 2% | No change |
| Tax on savings interest | 20%, 40%, 45% | 24%, 44%, 49% |
| Tax on rental income | 20%, 40%, 45% | 24%, 44%, 49% |
| Tax on dividends | 10.75%, 35.75%, 39.35% | No change |
| Dividend allowance | £500 | £500 |
| Trading allowance | £1,000 | £3,000 |
| Cash ISA allowance | £20,000 | £20,000 (the planned cut to £12,000 is cancelled) |
| National Living Wage (21 and over) | £12.71 an hour | £13.21 an hour from 1 April 2027 |
| Stamp duty on homes | Rates from 1 April 2025 | No change |
Your pay: no change in tax, but frozen thresholds
Income tax bands, the personal allowance and the main National Insurance thresholds stay where they are in 2027/28 and are frozen until April 2031. On the same salary, your take-home pay in 2027/28 will be the same as now. If you get a pay rise, more of it is taxed at your top rate, because the thresholds don’t rise with prices. Check your figures with the UK take-home pay calculator.
The National Living Wage rises 3.9% to £13.21 an hour on 1 April 2027, worth about £910 a year for a full-time worker. Scottish income tax rates are set by the Scottish Budget, usually in December or January.
Savings interest: 4 points more tax from April 2027
From 6 April 2027, interest outside an ISA or pension is taxed at 24% for basic-rate taxpayers, 44% for higher-rate and 49% for additional-rate, up from 20%, 40% and 45%. The rates apply across the UK, including Scotland. The government says 84% of taxpayers won’t pay more, because the Personal Savings Allowance still covers the first £1,000 of interest for basic-rate taxpayers and £500 for higher-rate taxpayers, and ISAs stay tax-free.
- Basic-rate taxpayer with £3,000 of interest: £2,000 is taxable after the allowance. Tax goes from £400 to £480.
- Higher-rate taxpayer with £5,000 of interest: £4,500 is taxable. Tax goes from £1,800 to £1,980.
The easiest way to avoid it is to move savings into a cash ISA before April 2027. The £20,000 cash ISA limit, which was due to fall to £12,000 for under-65s, now stays at £20,000 for everyone.
Landlords: higher tax on rental profits
Rental income gets its own rates from 6 April 2027: 24%, 44% and 49% in England, Wales and Northern Ireland. Scotland and Wales can set their own property rates. A higher-rate landlord with £10,000 of rental profit pays £4,400 instead of £4,000. Landlords who own through a company pay corporation tax instead, which this doesn’t change.
Side income: the trading allowance triples
From April 2027 you can earn up to £3,000 a year from selling, freelancing or a side business without paying tax or filing a return on it, up from £1,000. Above that, you can deduct £3,000 instead of your actual expenses if that’s better. The self-employed tax calculator shows your tax for 2026/27.
Pensioners and first-time buyers
- Pension Tax Allowance: from 6 April 2027 to 5 April 2030, people over State Pension age whose total income is no more than the full new State Pension pay no income tax. Above that, the relief tapers away. About 500,000 pensioners benefit.
- State Pension: the full new State Pension rises 3.9% in April 2027, by about £488 a year.
- Lifetime ISA: the withdrawal charge for buying a home over the £450,000 price cap falls from 25% to 20%, from Budget day.
- First Time Buyer ISA: a new account for saving a deposit was announced; details are still to come.
- Stamp duty: no change to the rates for homes. See the exact tax at common prices, such as stamp duty on £300,000 or £500,000.
Business owners and employers
- Founders Relief: a new 10% capital gains tax rate for founders of eligible high-growth companies, on up to £10 million of lifetime gains. For everyone else, capital gains tax rates are unchanged.
- Dividends: no change for 2027/28; the April 2026 rates of 10.75% and 35.75% stay. Work yours out with the dividend tax calculator.
- Benefits in kind such as company cars and private medical insurance must be taxed through payroll from April 2027.
- Salary sacrifice: as announced last year, pension contributions made through salary sacrifice above £2,000 a year will pay National Insurance from April 2029.
- VAT stays at 20%, and the registration threshold stays at £90,000.