A number of changes to the taxation of dividends, property income and savings income were announced in the Autumn Budget 2025. These measures will affect the rates at which different types of income are taxed and will be introduced in stages over the next few years.

From April 2026, the tax rates applying to dividend income will increase by 2%. The ordinary dividend rate will rise to 10.75%, while the upper dividend rate will increase to 35.75%. The dividend additional rate and the dividend trust rate will remain unchanged at 39.35% as will the dividend allowance at £500.

Further changes will apply from April 2027. Income Tax rates on both property income and savings income will increase by 2%. For the 2027–28 tax year, property income will be taxed at 22% (basic rate), 42% (higher rate) and 47% (additional rate). Savings income will also be taxed at the same rates.

Alongside these rate changes, the government is also reforming how Income Tax is calculated by altering the current ordering rules that determine the calculation of Income Tax. Under the current system, savings and dividend income are treated as the highest part of an individual’s income. Most other income, such as employment, pension or trading income, is grouped together as “non-savings, non-dividend income” and taxed first.

Under the new rules, the revised order of taxation will be:

  1. Income that is not property, savings or dividend income
  2. Property income
  3. Savings income
  4. Dividend income

These changes to the calculation of Income Tax are intended to better reflect the different nature of income sources and ensure the new tax rates for property, savings and dividends operate as intended.

Source:HM Revenue & Customs | 09-03-2026
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Aitch
I'm Aitch, the Founder and CEO of CIGMA Accounting Ltd. As a Chartered Management Accountant and as a CIMA member, I've spent more than 16 years helping businesses, entrepreneurs, landlords, and individuals with tax planning, accounting, and HMRC compliance. As a chartered accountant in London, I'm passionate about making complex tax matters easier to understand and helping clients make confident financial decisions. Over the years, I've advised start-ups, SMEs, established companies, and high-net-worth individuals across a wide range of tax and accounting matters. My expertise includes Corporation Tax, Self-Assessment, Capital Gains Tax, Inheritance Tax planning, R&D tax relief, capital allowances, international tax, and resolving complex HMRC compliance issues. Whether clients need a business accountant, tax accountant, or strategic tax advisor, my focus is always on delivering practical advice that creates long-term value. One of my specialist areas is Making Tax Digital (MTD). I've worked extensively with businesses preparing HMRC's digital reporting requirements, helping them move to cloud accounting, improve financial processes, and adopt technology that makes compliance more efficient. I regularly speak at Making Tax Digital roadshows, industry events, and educational sessions in collaboration with Zoho Books, sharing practical insights into digital accounting, tax legislation, and the future of the profession. Many business owners looking for the best accounting firm in London are not simply searching for an accountant they're looking for trusted advice, responsive support, and long-term value. That's the approach I've taken in building CIGMA Accounting. My team and I work closely with businesses across London and the UK, providing accounting services, tax advisory, bookkeeping, payroll, VAT, company accounts, and strategic tax planning tailored to each client's goals. Through this website, I share practical guidance on UK taxation, Making Tax Digital, HMRC updates, Corporation Tax, Self-Assessment, and business finance. My aim is to provide reliable, straightforward information that helps business owners understand changing regulations, reduce compliance risks, and make informed financial decisions with confidence.
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