New tax rules and rates after changes made in the 2025 Autumn Budget are set to take effect from the new tax year (2026/27)
From April 2026, dividend tax rates for basic and higher-rate taxpayers will increase by two percentage points, rising to 10.75% and 35.75% respectively. The additional rate will remain unchanged at 39.35%.
At the same time, the government has announced further changes affecting savings and property income from 2027, with tax rates increasing across all income bands.
From 6 April 2027, the UK government is increasing income tax rates on savings and property income by two percentage points across all bands to match National Insurance, as initially announced in the Autumn Budget 2025. Rates will rise to 22% (basic), 42% (higher), and 47% (additional).
While these adjustments may appear relatively modest, they point out that for long-term financial plans, the tax landscape can change quickly.
Over time, even small changes to tax rates, allowances or thresholds can affect how efficiently your portfolio performs and how retirement plans are laid out.
The number of people paying dividend tax has already increased in recent years as allowances have been reduced. Around 3.7 million individuals now pay dividend tax, nearly double the number seen just a few years ago.
This demonstrates how policy changes can gradually bring more people into the tax net, particularly as investment portfolios grow and income from dividends increases.
At the same time, the government has chosen to continue with the freeze on many tax thresholds for several years, including income tax and inheritance tax (IHT).
When allowances remain fixed while wages and investment income rise, more individuals can find themselves moving into higher tax bands known as ‘fiscal drag’.
However, reacting impulsively to every tax change is rarely the best approach.
Financial planning is typically built around long-term goals so making sudden changes to an investment plan purely because of short-term tax developments can sometimes undermine those longer-term objectives. Selling investments or restructuring portfolios too quickly could trigger unnecessary tax liabilities.
This is where regular reviews with a financial planner can be particularly valuable. A planner can help you assess how policy changes to rates and frozen thresholds can affect your wider financial goals.
Regular reviews allow your financial plans to adapt gradually as the tax environment changes, helping you stay focused on long-term goals.