UK Tax Changes 2027/28: What Changes From 6 April 2027
Higher tax on savings interest and rental profits, a Personal Allowance frozen at £12,570, Making Tax Digital for sole traders and landlords over £30,000, and unused pensions brought into inheritance tax.
Main change for 2027/28
Tax rates on savings and property income from 6 April 2027
UK tax 2026/27 vs 2027/28
| Parameter | 2026/27 | 2027/28 | Status |
|---|---|---|---|
| Personal Allowance | £12,570 | £12,570 (frozen to April 2031) | Adopted |
| Basic rate band / additional-rate threshold | £37,700 / £125,140 | Unchanged | Adopted |
| Main rates (England, Wales, NI) | 20% / 40% / 45% | 20% / 40% / 45% | Announced (annual Finance Bill) |
| Savings income rates | 20% / 40% / 45% | <strong>22% / 42% / 47%</strong> | Adopted |
| Property income rates (England, Wales, NI) | 20% / 40% / 45% | <strong>22% / 42% / 47%</strong> | Adopted |
| Employee NI (Class 1) | 8% on £12,570–£50,270, 2% above | Thresholds frozen, no rate change | Announced |
| Employer NI | 15% above £5,000 | Threshold frozen | Announced |
| Class 4 NI (self-employed) | 6% on £12,570–£50,270, 2% above | No change | Announced |
| Making Tax Digital for Income Tax | Income over £50,000 | <strong>Over £30,000</strong> (£20,000 from April 2028) | Adopted |
| Cash ISA limit (under 65) | £20,000 | £12,000 (overall ISA limit £20,000) | Announced |
| Unused pensions and inheritance tax | Outside the estate | Inside the estate | Adopted |
| Student loan Plan 2 threshold | £29,385 | £29,385 (frozen) | Announced |
| National Living Wage (21+) | £12.71 an hour | Not yet published | Pending (Budget, 28 Oct 2026) |
| Scottish rates and bands | 19% to 48%, six rates | Not yet published | Pending (Scottish Budget) |
Adopted: in Finance Act 2026 or earlier law. Announced: set in Budget 2025, still needs the annual Finance Bill or NI regulations. Pending: not published yet.
Take-home pay: 2026/27 vs 2027/28
| 2026/27, £40,000 | 2027/28, £40,000 | 2027/28, £41,200 (+3%) | |
|---|---|---|---|
| Income tax | £5,486.00 | £5,486.00 | £5,726.00 |
| Employee NI | £2,194.40 | £2,194.40 | £2,290.40 |
| Take-home pay | £32,319.60 | £32,319.60 | £33,183.60 |
Single employee in England, no children, standard Personal Allowance, no pension or student loan deductions. 2027/28 uses the adopted allowance and bands plus the announced rates and NI thresholds. Of a £1,200 raise, £240 goes to income tax and £96 to NI.
Savers and landlords
Savings interest
The Personal Savings Allowance still covers the first £1,000 of interest for basic-rate taxpayers and £500 for higher-rate taxpayers. Interest above it is taxed at 22%, 42% or 47%.
A basic-rate taxpayer with £3,000 of interest pays tax on £2,000: £400 in 2026/27, £440 in 2027/28 (+£40).
Cash ISA: from April 2027, under-65s can put at most £12,000 a year into cash; over-65s keep £20,000. Announced, secondary legislation still to come.
Rental profits
In England, Wales and Northern Ireland, property profits are taxed at 22% / 42% / 47%. Scotland and Wales get powers to set their own property income rates.
£10,000 of property profit costs £200 more tax a year in any band (example without mortgage interest).
New ordering rule: allowances and reliefs go against employment or trading income first, then property, savings and dividends.
Self-employed: Making Tax Digital
Quarterly digital updates over £30,000
From 6 April 2027, sole traders and landlords with qualifying income over <strong>£30,000</strong> must keep digital records and send quarterly updates to HMRC through compatible software. The test uses your 2025/26 return, and HMRC writes to people in scope. The threshold falls to £20,000 from April 2028.
Class 4 NI stays at 6% between £12,570 and £50,270 and 2% above.
Landlords in England, Wales and NI over the threshold get both changes at once: MTD reporting and the higher property rates.
Expats, new arrivals and pensions
If you live in the UK or plan to move
The 4-year foreign income and gains (FIG) regime for people not UK resident in the previous 10 years has no 2027 change.
From 6 April 2027, unused pension funds and death benefits count towards your estate for inheritance tax. Check this if you hold a UK pension pot you may not draw in full.
Your 2026/27 return uses the old rates
FAQ
What changes in UK tax in 2027?
From 6 April 2027, tax on savings interest and on rental profits (England, Wales, NI) rises to 22% / 42% / 47%. The £12,570 allowance stays frozen, Making Tax Digital starts above £30,000, and unused pensions come into inheritance tax.
Will my take-home pay change in 2027/28?
Not if your salary stays the same: allowance, bands and NI thresholds are frozen, so £40,000 nets £32,319.60 in both years. Any raise is taxed at your full marginal rate.
Do I need to join Making Tax Digital in April 2027?
Yes, if you are a sole trader or landlord with qualifying income over £30,000 on your 2025/26 return. You will need compatible software and quarterly updates.
When will the National Living Wage for April 2027 be known?
It is normally confirmed at the Budget, this year on 28 October 2026. The current rate for workers aged 21 and over is £12.71 an hour.
