UK households face new tax charges from April, with affected taxpayers losing an average of £225 on property income and £113 on savings income, following HMRC's confirmation of higher rates for the 2027-28 tax year.
Chancellor John Healey doubled the previously planned increase, raising savings and property taxes by four percentage points per income tax band instead of the two percentage points proposed by former Chancellor Rachel Reeves.
New savings and property tax rates
HMRC has set out that the new savings tax rates will be 24% for basic rate taxpayers earning under £50,270, up from 20% this year. Higher rate taxpayers earning above £50,270 will see rates rise to 44%, up from 40%, while top rate taxpayers earning £125,140 will see rates jump from 45% to 49%.
The same rates will apply to property income, including income from privately rented properties.
Government statement on the changes
HMRC said: "The government is increasing rates of tax on savings and property income to support its commitment to fiscal discipline and ensure measures to support households and businesses are fully funded. These measures were announced at Budget 2026."
HMRC added: "It is estimated that around 5% of taxpayers will see an average tax rise of £225 annually in 2027 to 2028 as a result of the increase in property rates, and around 12% of taxpayers will see an average tax rise of £113 annually in 2027 to 2028 as a result of the increase in savings rates. A basic rate taxpayer making full use of the Starting Rate for Savings and the Personal Savings Allowance would need over £150,000 in savings (held outside an ISA), paying 4%, to start paying tax on interest."
Budget context and impact
The Budget documents said: "Budget 2025 increased the rates of tax on savings and property income by two percentage points across all tax bands from April 2027. The Government will increase these rates by a further two percentage points from that date."
The documents added: "This is a fair and proportionate approach, and 84% of income tax payers will be unaffected by these changes."
Around half of the revenue raised from the change is expected to come from the top 10% of households, according to the Budget documents.
Haydn Thomas, chief executive of Cornerstone Finance Group, said: "The reversal of plans to cut the annual cash Isa allowance from £20,000 to £12,000 is to be welcomed, but the Chancellor also announced an increase in the rate of tax on income from savings by two percentage points from April."
