What the Autumn Budget's rental income and savings interest tax rise means for you

The 2026 Autumn Budget included a range of measures affecting households, investors and business owners. While the headline rates of income tax on earnings remain unchanged, tax on property and savings income is set to rise.

The Budget announced a further two percentage point increase in the tax rates applying to property income and savings income from 6 April 2027. However, you may have seen details published which appears to show an increase of four percentage points. This is due to the fact that a two percentage point increase had already been announced at the previous Budget, an increase also due to take effect from that same date.

Together, the two increases mean the rates will be four percentage points higher than they are now:

The new rates apply to taxable property and savings income. They do not mean that every landlord or saver will pay four percentage points more tax on all their income. The amount due will depend on your wider tax position, available allowances and, for property income, the taxable profit from letting.

The rates on earnings and dividends are not changing as part of this measure, and these increased property income tax rates will apply in England, Wales and Northern Ireland, while savings income rates will apply across the UK. Scotland can set its own property income tax rates for Scottish taxpayers, so the final Scottish rates will depend on a decision by the Scottish Parliament.

You may be affected by these changes if you receive taxable interest from savings, as well as rental income from property. This includes some people who would not describe themselves as professional or ‘career’ landlords.

For example, you might inherit a property and rent it out, even for a short time. Or a change in your relationship status might mean you rent out a former main home. You could also let a home after moving elsewhere, or earn rent from a second property. If that rental income is taxable, the new rates may apply to you.

Everyone’s situation is unique, and the tax position will depend on your circumstances and how the property is owned.

For savers, the increase applies to taxable savings income, which may include interest from bank and building society accounts. Some people will remain within available tax-free allowances, and interest held in an ISA continues to benefit from the ISA’s tax treatment.

The Budget also confirmed a 100% premium on the high value council tax surcharge (often referred to as the ‘mansion tax’) for properties left empty and unoccupied for 12 months or more. The surcharge applies to qualifying high-value homes in England, with the sliding scale surcharge applicable on homes valued at £2 million or above. This is a separate measure from the income tax rise on rental income, and it relates to the surcharge payable on the property, not the tax rate on rent, but one worth noting for affected owners.

These changes may make looking at alternative holding structures worth considering for some investors. Holding residential property through a company, often called a special purpose vehicle or SPV, is one option that could be reviewed. Company ownership has different tax and administrative implications from personal ownership, including how rental profits are taxed and what happens when money is taken out of the company.

It will not be suitable for everyone and is a complex area. The right approach depends on factors such as the purpose of the property, financing, expected income, plans for sale or transfer, and the owner’s wider financial circumstances. Anyone considering a change should weigh up the full implications before acting and seek professional advice.

The new rates are due to take effect from April 2027, so there is time to understand how they may affect your position. For property owners, that may mean reviewing expected rental income and the way a property is held. For savers, it may be helpful to consider how much cash is needed for short-term spending and emergencies, alongside the tax treatment of different savings options.

The Budget changes do not point to one solution for every landlord or saver. A review should take account of your wider financial plans, tax position and objectives before you decide whether to make any changes. To discuss your personal situation, you can speak to your usual Evelyn Partners contact or book an appointment.