Four upcoming tax increases you need to know about

From interest on savings to rental income, the Government is casting a wide net with changes to the UK’s tax regime.

Some increases will be introduced at the start of the new tax year on 6^th April 2026, with more planned for next year. What’s more, with many tax-efficient allowances and thresholds remaining frozen for several years, a larger portion of your wealth could become subject to higher rates of tax.

With so many different announcements and changes, it’s easy to get lost in the noise and miss important updates that could affect your finances. But by staying on top of the new rules and rates, you could help mitigate the impact of tax rises.

Read on to learn about four tax increases set to be introduced over the next couple of years, and what steps you could take now to protect your wealth.

1. Higher relief rates for Capital Gains Tax apply from 6^th April 2026

Capital Gains Tax (CGT) has already been subject to numerous changes in recent years, leading to CGT receipts surging from £10 billion to £17 billion in one year, as Money Marketing reports.

In October 2024, the lower rate of CGT rose from 10% to 18%, whilst the higher rate increased from 20% to 24%. But some rates are rising once again in April 2026, including:

• Business Asset Disposal Relief: When selling all or part of your business, you may qualify for a reduced rate of CGT. Effective 6^th April 2026, this rate will rise from 14% to 18%, having already increased from 10% in 2025.
• Investors’ relief: You may be eligible for a reduced CGT rate when disposing of shares in a trading company not listed on a stock exchange, subject to strict criteria. Investors’ relief rates are rising from 14% to 18%, with effect from 6^th April 2026.
• Carried interest: In 2025/26, carried interest is subject to CGT at a rate of 32%. But from 6^th April 2026, it will be classified as trading profit and subject to Income Tax and National Insurance. As a result, additional-rate taxpayers will pay an effective rate of 34.075%.

Typically, CGT is charged on the profits you earn from selling qualifying assets. These include:

• Non-ISA shares
• Certain business assets
• A property that isn’t your main home
• Personal possessions worth more than £6,000 (excluding your car).

However, the Annual Exempt Amount allows you to make profits of up to £3,000 a year without being subject to CGT.

This tax-efficient allowance cannot be carried forward to the next tax year. As such, if you’re planning to sell multiple assets, it might be worth timing the sales to make the most of multiple years’ allowance and mitigate your tax bill by spreading sales over more than one tax year.

2. Some Dividend Tax rates are increasing from April 2026

Over the past 11 years, Dividend Tax has changed seven times. In 2026/27, some rates are set to rise again.

Your Dividend Tax rate is determined by your Income Tax bracket. Effective 6^th April 2026, the basic and higher rates will increase by two percentage points:

• Basic-rate taxpayers: Increasing from 8.75% to 10.75%
• Higher-rate taxpayers: Increasing from 33.75% to 35.75%
• Additional-rate taxpayers: Remaining unchanged at 39.35%

As of 2026/27, you can earn up to £500 in dividends tax-free. This Dividend Allowance is now just 10% of what it was 10 years ago: in 2016, you could earn up to £5,000 without being taxed.

Not only could you end up paying a higher rate on a larger portion of your dividends, but frozen Income Tax thresholds could see you move into a higher tax bracket as your income rises.

If you’re earning dividends through investments, you may be able to reduce your tax bill by investing through a Stocks and Shares ISA. These accounts allow you to earn tax-free dividends on investments up to £20,000 a year, as of 2026/27.

Learn about our investment support and planning services.

3. Interest on savings will be taxed at a higher rate from April 2027

Next year, the rate of tax charged on savings interest will rise by two percentage points.

In 2026/27, Income Tax is charged on cash savings interest at your marginal rate. From 2027, these rates will rise to:

• Basic-rate taxpayers: 22%
• Higher-rate taxpayers: 42%
• Additional-rate taxpayers: 47%.

Income Tax is typically only charged on interest from non-ISA savings, and only when your interest accruals exceed your Personal Savings Allowance (PSA). However, with the PSA remaining frozen rather than rising with inflation, you may find more of your money’s growth becomes subject to tax.

In 2026/27, your PSA is also determined by your Income Tax bracket:

• Basic-rate taxpayers: £1,000
• Higher-rate taxpayers: £500
• Additional-rate taxpayers: £0.

You may be able to earn more interest tax-efficiently by saving in a Cash ISA. As described above, you can pay in up to £20,000 a year across all your ISAs without being taxed on growth. However, it’s important to note that the Cash ISA allowance will effectively reduce to £12,000 a year for under-65s from April 2027.

Find out more about upcoming ISA changes.

4. Property Income Tax will rise in April 2027

Generally, income generated through renting out a property is subject to Income Tax at your marginal rate. From April 2027, these rates will increase by two percentage points:

• Basic-rate taxpayers: 22%
• Higher-rate taxpayers: 42%
• Additional-rate taxpayers: 47%.

You can earn up to £1,000 a year in property income without needing to pay tax.

Get in touch

If you’re worried about rising taxes, get in touch to find out how our Financial Planners can help you mitigate your bills.

Email us at enquiries@pen-life.co.uk, or call 01904 661140.

Please note

This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate tax planning.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.