Budget 2025: Tax Hikes Targeting savings, Property, adn Dividends Approved
London – Millions of savers and investors are facing increased tax bills following measures announced in the recent budget. Chancellor Rachel Reeves outlined plans to raise taxes on savings, property income, and dividends, aiming to “narrow the gap between tax paid on work and tax paid on income from assets.” The changes have been widely described as a ”tax raid” on savers, landlords, and shareholders.
From April 2027, income tax rates on savings and rented property will increase by 2 percentage points. This means basic-rate taxpayers will pay 22% on interest or property income, higher-rate taxpayers 42%, and additional rate taxpayers 47%, after utilizing any available allowances.
Prior to this, dividend taxes will be increased starting in April 2026. The ordinary rate will rise from 8.75% to 10.75%,while the upper rate will increase from 33.75% to 35.75%.
Sarah Coles, head of personal finance at Hargreaves Lansdown, stated, “This is a really shocking tax rise for savers… The personal savings allowance will still protect the first £1,000 of savings interest for basic-rate taxpayers and £500 of interest for higher-rate taxpayers, but after that, people will face a hike in their tax bill.”
Coles also noted, “This tax attack on dividends flies in the face of the government’s desire to encourage investors to hold UK equities.”
Zena Hanks, a partner at Saffery accountancy firm, warned the higher property income taxes would “tighten already thin margins, leaving many landlords feeling they have little option but to pass costs on to renters in order for their rental business to stay viable.For some, it might very well be the final straw that pushes them out of the market altogether.”
The Treasury maintains that in each case, over 90% of taxpayers will not be affected by the new charges due to their income levels.
