HM Revenue & Customs (HMRC) has officially confirmed the implementation timeline for a series of significant tax changes announced in the recent Autumn Budget. The measures, unveiled by Chancellor Rachel Reeves, are set to reshape the financial landscape for millions of Britons over the coming years.
Key Dates for Savings and Property Tax Increases
The tax authority has specified that several major adjustments will commence from April 1, 2027. On this date, the rates of tax applied to savings income will see a uniform 2% rise. This will push the basic rate to 22%, the higher rate to 42%, and the additional rate to 47%.
Simultaneously, the tax treatment of property income will be separated, introducing its own distinct rates. From the same April 2027 date, the property basic rate will be 22%, the property higher rate 42%, and the property additional rate 47%.
In a move affecting many savers, the annual tax-free allowance for cash ISAs will be reduced from £20,000 to £12,000 for individuals under 65. The government stated this aims to encourage more investment. Notably, the over-65s have been exempted from this reduction, recognising that a significant portion of those saving above £12,000 annually into cash ISAs are pensioners.
Pension Salary Sacrifice Rules to Tighten
A major reform targeting pension contributions made through salary sacrifice schemes has been scheduled for April 2029. Currently, both employees and employers save on National Insurance Contributions (NICs) when an employee sacrifices part of their salary for a pension contribution.
Under the new rules, only the first £2,000 of pension contributions made via salary sacrifice each year will be exempt from NICs. Any contributions above this threshold will be subject to both employer and employee National Insurance.
It is important to note that employees can still contribute any amount they wish to their pensions, including through salary sacrifice, and these contributions will remain exempt from income tax. Arrangements for sacrificing salary to receive Tax-Free Childcare or Child Benefit are also unaffected.
Broader Budget Context and Fiscal Outlook
These detailed timeframes follow Chancellor Rachel Reeves's Autumn Budget, which outlined £26 billion a year in tax rises. The budget itself was subject to an accidental early release by the Office for Budget Responsibility (OBR) just before its official publication.
Key policies from the budget include the introduction of a new 'mansion tax' on properties valued over £2 million and the abolition of the two-child benefit limit, a long-standing demand from anti-poverty campaigners.
Following the budget, Downing Street rejected claims that the Chancellor had misled the public regarding the state of public finances. The OBR clarified that it had informed the Treasury in September that the fiscal 'black hole' was smaller than initially suggested, and by October 31, it confirmed the shortfall had been eliminated, leaving a small surplus.
The confirmation from HMRC provides households and financial planners with clear dates to prepare for these substantial changes to the UK's tax system.
