Increases in income tax rates on investment income
The 2025 budget introduced an increase in the tax rates on investment income. Those old enough may remember the Labour government of the early 1970s, the last time an added surcharge was placed on investment, as opposed to earned, income. At its height the surcharge got up to 15%. At the moment, the surcharge is set at 2% as summarised below, but we should watch out for any potential increases in the upcoming budget.
For property income and interest on deposits the following rates apply from April 2027:
- basic rate at 22%
- higher rate at 42%
- additional rate at 47%
For dividends the following rates apply from a year earlier, so are already effective from April 2026:
- basic rate at 10.75%
- higher rate at 35.75%
- additional remains at 39.35%
If you have any questions about how these changes affect your personal tax or company tax planning, please don’t hesitate to reach out to our team. Visit our social media for regular updates: Twitter | LinkedIn
