Alongside the dividend tax rate rise, the government also announced 2 percentage point increases to the tax rates on savings income and on property income. An adviser preparing a 2026/27 tax return wants to know whether these savings and property rate increases already apply. Based on the announced implementation timetable, which statement is correct?
- The savings and property rate increases took effect from 6 April 2026, the same date as the dividend rate rise, so they apply in full for the 2026/27 tax year
- The savings and property rate increases were cancelled before taking effect and have never applied in any tax year
- The savings and property rate increases take effect from 6 April 2027, one year after the dividend rate rise, so for the 2026/27 tax year the previous savings and property rates still apply
- The savings and property rate increases applied retroactively from 6 April 2025, a full year before the dividend rate rise
Why C? And why not the others?
Correct answer: C. The savings and property rate increases take effect from 6 April 2027, one year after the dividend rate rise, so for the 2026/27 tax year the previous savings and property rates still apply
The government staggered these changes: the dividend rate rise took effect from 6 April 2026, but the matching 2 percentage point increases to savings income tax rates and the new property income tax rates were announced to take effect a year later, from 6 April 2027, so for the 2026/27 tax year covered by this return the previous, lower savings and property rates still apply, exactly as the correct option describes. The option claiming all three changes started together on 6 April 2026 is wrong because only the dividend rate rise took effect on that date; savings and property changes were deliberately deferred by a further year. The option claiming the changes were cancelled is wrong because they remain scheduled to take effect from 6 April 2027, not abandoned. The option describing retroactive application from 6 April 2025 is wrong both on direction and date: the changes are prospective and take effect after the dividend change, not before it.
Source: GOV.UK: Changes to tax rates for property, savings and dividend income