HM Revenue and Customs (HMRC) has released a detailed schedule outlining when a series of significant tax reforms, announced by Chancellor Rachel Reeves in last week's Autumn Budget, will take effect across the United Kingdom. The £26bn package of tax rises and reforms was accidentally published early by the Office for Budgetary Responsibility (OBR).
The measures, which include a new levy on high-value homes and the abolition of the two-child benefit cap, are part of a government effort to rebalance public finances. The newly published timetable reveals that several of the most substantial changes will be phased in over the coming years, giving many households time to adjust their financial planning.
Savings and Investment Reforms
One of the most significant shifts will see an increase in the tax rates applied to savings income. From April 1, 2027, these rates will rise by two percentage points across all bands. This change will lift the basic rate to 22%, the higher rate to 42%, and the additional rate to 47%.
While the personal savings allowance remains unchanged, allowing basic-rate taxpayers £1,000 in tax-free interest, any interest earned beyond the allowance will be taxed at these new, higher rates once they apply.
In a parallel move, the annual tax-free allowance for Cash ISAs will be reduced from £20,000 to £12,000 for savers under the age of 65. The government states this aims to encourage a shift towards long-term investments. Savers aged 65 and over will retain the higher £20,000 allowance, a decision informed by HMRC data showing pensioners make up a large portion of those saving more than £12,000 annually.
Pensions and Salary Sacrifice Overhaul
A major reform targeting pension contributions made through salary sacrifice schemes is set for April 2029. Currently, these arrangements allow employees to sacrifice part of their salary in exchange for increased pension contributions, saving both employees and employers money on National Insurance Contributions (NICs).
Under the new rules, only the first £2,000 of salary-sacrificed pension contributions each year will remain exempt from NICs. Contributions above this threshold will still be free of income tax but will attract NICs for both parties. HMRC has clarified that employees can still contribute unlimited amounts to their pensions by other methods; the restriction applies solely to the NIC relief on larger salary sacrifice sums.
Arrangements for Tax-Free Childcare or Child Benefit via salary sacrifice will not be affected by this change.
Property and Dividend Tax Increases
The Budget also confirmed hikes in tax rates on dividend income and property. From April 2027, the ordinary dividend rate will rise to 10.75%, with the upper rate increasing to 33.75%.
In the same tax year, property income will move to its own rate structure. Landlords will face a basic rate of 22%, a higher rate of 42%, and an additional rate of 47%, aligning with the new savings tax bands.
Regarding the controversy over the OBR's early publication, Downing Street has rejected claims that the Chancellor misled the public. The OBR advised in September that the projected deficit was smaller than feared, and by October 31 confirmed the budget gap was filled, forecasting a modest surplus. The government maintains that longer-term fiscal pressures justify the scale of the announced tax measures.
