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Outbyte PC Repair FREEClear out junk files and repair common Windows errorsFree Scan →Outbyte Driver Updater FREEScan for outdated or missing drivers - takes under a minuteDriver Scan →From 6 April 2027, certain reliefs and allowances will be applied to non-savings income before property, savings and dividend income in the income-tax calculation. This is a change in the order of calculation, not a tax-rate increase by itself. Separately, statutory rates for savings and property income in 2027–28 are set at 22%, 42% and 47%; what you owe will depend on your income mix, applicable reliefs and allowances, and jurisdiction.
What changes from 6 April 2027?
HM Treasury’s Budget 2025 overview describes a revised ordering rule for reliefs and allowances deductible at steps 2 and 3 of the income-tax calculation. From 6 April 2027, these deductions must first be set against non-savings income; only after that are they applied to property, savings and dividend income. HM Treasury’s Budget 2025 overview and its overview of tax legislation and rates describe the policy and commencement.
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This is an ordering rule, not a blanket change to every allowance or relief. It does not mean that everyone will pay more: the effect, if any, depends on the types and amounts of income, which deductions apply and the rate bands involved.
What are the 2027–28 savings and property rates?
Finance Act 2026 sets the following rates for tax year 2027–28. These are rates for the named income categories, not a replacement for the general rates that apply to other income.
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| Income category | Basic rate | Higher rate | Additional rate |
|---|---|---|---|
| Savings income | 22% | 42% | 47% |
| Property income | 22% | 42% | 47% |
The figures are statutory values in Finance Act 2026 for 2027–28, rather than forecasts. The Act provides a route for Scotland and Wales to set property-income rates through devolved powers. Check the rules applicable to your jurisdiction and the relevant tax year before treating the property figures as a single UK-wide rate schedule.
Which allowances and limits stay in place?
Finance Act 2026 also provides that the personal allowance remains £12,570 and the basic-rate limit remains £37,700 for 2027–28. The savings starting-rate limit remains £5,000. These amounts are separate from the ordering rule: they set thresholds or allowances, while the new rule determines where specified deductions are applied in the calculation.
The amounts are set in legislation through 2027–28. A historical discussion of default CPI indexation in a UK Parliament committee transcript dated 28 January 2025 should not be taken as the final rule for this year.
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Clear out junk files and repair common Windows errorsFree Scan →Fix the driver behind crashes, sound loss and screen glitchesFind Drivers →How could the ordering rule affect a tax calculation?
The rule may change which category of income remains within a particular rate band when someone has more than one kind of income. For example, a person with employment income and rental or savings income may have a deduction applied to non-savings income first, rather than to another income category. That can alter how much income in each category is exposed to its applicable rate.
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The statutory rule alone does not establish the size or direction of an individual’s tax change. A reliable comparison requires the full income mix, applicable reliefs and allowances, the calculation step for each deduction, rate bands, tax year and jurisdiction. No personal estimate can be drawn from the headline rates alone.
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What to check when comparing 2026–27 with 2027–28
- Separate non-savings, property, savings and dividend income rather than adding them together without distinction.
- Identify each relief or allowance and whether it is deducted at step 2 or step 3 of the calculation.
- Check which rate band applies to each income category and the tax year being calculated.
- Confirm the relevant jurisdiction, particularly for property income.
- Use complete income and relief information for a before-and-after calculation; the statutory rates and limits alone are not enough to estimate an individual result.
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