John Healey has increased tax rates on property and savings income by two percentage points, doubling a rise previously announced by former Chancellor Rachel Reeves. Starting April next year, the basic rate on property income rises to 24 per cent, the higher rate to 44 per cent, and the additional rate to 49 per cent. Government forecasts predict the tax will yield approximately £35 million in 2027-28, rising to £575 million in 2028-29 before falling to £455 million by 2031-32.
Industry leaders warn the policy places further pressure on private landlords already facing squeezed margins and increased compliance costs. James Evans of Douglas & Gordon suggests the measures provide "another reason for landlords to exit the sector," while Chris Norris of the National Residential Landlords Association calls the move "incredibly damaging," arguing landlords will pass costs to renters through higher rents. Adam Jefferies of PKF Littlejohn notes landlords now face tough choices: sell up, leave the market, or hold property through a company.
Despite the tax increases, John Healey confirmed the £20,000 annual cash ISA allowance remains, stating 88 per cent of people will pay no more tax on savings. Isabella Galliers-Pratt of Rathbones warns the changes make holding large cash deposits unattractive for higher-rate taxpayers, where a 4 per cent savings rate delivers just 2.04 per cent after tax at the additional rate.
Source: Financial Times Companies · Summarized by HeadlinesBriefing