property and savings to apply from April 2027. The basic, higher and additional rates on rental and savings income will all rise by 2% in 2027/28 to 22%, 42% and 47%. From April 2027, there will be new rules about the order in which certain tax reliefs are deducted from income, so that they must be set first against income which is taxable at the lower rates before they can be set against savings, rental and dividend income. The Budget document points out that 90% of people do not pay tax on savings income; however, for those whose income from these sources exceed their tax-free allowances, it will be necessary to calculate and settle the liability each year. These tax increases make tax-free Individual Savings Accounts even more attractive, The Scottish government has the power to set its own income tax rates for Scottish taxpayers for non-savings, non-dividend income. Many Scottish taxpayers now pay at higher rates of income tax than those elsewhere in the UK, although some low earners pay less. The Scottish Budget, which will confirm the rates for 2026/27, will take place on 13 January 2026. The Welsh government has similar powers for Welsh taxpayers but has not yet varied the main UK rates. The draft Welsh Budget will be published on 20 January 2026 and will be finalised by 27 January 2026. as any income or gains arising within an ISA are tax-free. Scottish and Welsh rates – 2026/27 (Table A) The new rates on savings and dividend income will apply across the UK. The UK government will engage with the devolved governments to provide them with powers to set different rates for property income if they so decide. Winter fuel payment Earlier this year, the government relented and restored the Winter Fuel Payment to pensioners. However, it will be clawed back through the tax system from anyone with income of over £35,000. This can be avoided by disclaiming the payment in advance. The threshold of £35,000 will remain fixed for the duration of this Parliament. Employees Company cars (Table C) The basis for taxing company cars and fuel provided for private use is set out in the Table. Annual increases in the rates for use of the car have already been set up to 2029/30 ‘to provide long-term certainty for taxpayers and industry’. The rates are intended to provide a strong incentive to use electric vehicles, while rates for hybrids will be increased to align more closely with the rates for internal combustion engine vehicles. The figures used to calculate the following benefits all increase for 2026/27 by 3.8% in line with inflation: l the benefit of free use of business fuel for private journeys; l the taxable amount for the availability of a van for more than incidental private use; l the taxable amount for an employee’s private use of fuel in a company van.
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AUTUMN BUDGET 26 NOVEMBER 2025
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