Even Higher Taxes Incoming - Budget Update.

Additional Cash Taken in Taxes

Our taxes are high and this year is no different? but of course it even higher taxes are coming as allowances, rates have been frozen or increased and even a new council tax surcharge.

Hereare the 10 ways more of your money is going to be taken by HMRC and Government.

1. Even Higher Taxes on Property Income (from April 2027)

The government is creating separate, higher tax rates for property income. The basic rate increases to 22%, the higher rate to 42%, and the additional rate to 47%. This means landlords and property investors will pay more tax on rental income, even at the basic rate.

2. Higher Dividend Tax Rates (from April 2026)

Dividend tax rates are being increased by 2 percentage points for both the ordinary and upper bands. Individuals receiving dividend income—especially company directors who pay themselves via dividends—will see higher tax bills.

3. Even Higher Tax on Savings Income (from April 2027)

All savings tax bands increase by 2 percentage points. While most people won’t pay tax due to allowances, higher earners with large balances outside ISAs will see increased tax on savings income.

4. Income Tax Threshold Freeze Extended to 2031

The Personal Allowance (£12,570) and higher-rate threshold (£50,270) remain frozen until April 2031. As wages increase, more income becomes taxable, resulting in a stealth tax rise for millions.

5. National Insurance Threshold Freeze (2028–2031)

NIC thresholds for employees and the self-employed will remain frozen until April 2031. As earnings rise, more individuals fall into NI liability or pay more NI.

6. Inheritance Tax Threshold Freeze Extended to 2031

Inheritance Tax thresholds, including the £325,000 nil-rate band and £175,000 residence band, remain frozen until 2031. Rising property values mean more estates will be liable for IHT.

7. Student Loan Plan 2 Threshold Frozen (from 2027)

The repayment threshold stays fixed at £29,385 for three years from 2027. Graduates will repay more of their income as salaries rise, effectively increasing repayment costs.

8. Restriction on Reliefs and Allowances (from 2027)

Certain income tax reliefs must be applied to employment and trading income before being applied to investment income such as property, dividends, or savings. This limits tax planning flexibility and can increase tax liabilities.

From April 2029 the NIC advantage of making pension contributions via a Salary Sacrifice scheme, will reduce dramatically as only the first £2,000 of contributions will be free of NIC, anything above that will be subject to the prevailing NIC rate.

9. High-Value Council Tax Surcharge

A new council tax surcharge will apply to high-value residential properties, increasing bills for owners of expensive homes, especially in high-value regions like London.

10. What Next

I think I can safetly say now a full year ahead of the next budget, it will be the same, more tax rises as nothing has been put in place to grow our economy. If you read my earlier article (https://www.klaritytax.com/post/15-possible-taxes-floated-by-government) we may even see some of the new taxes floated this year may become reality!