Raise the savings and property income rates to 24%, 44% and 49% from 2027-28 (Budget 2026)

changelog.d/ab26-savings-property-rates.changed.md

@@ -0,0 +1 @@
+Raise the savings and property income rates to 24%, 44% and 49% from 6 April 2027 (Budget 2026).

policyengine_uk/parameters/gov/hmrc/income_tax/rates/property.yaml

@@ -1,22 +1,32 @@
-description: Property income tax rates. From April 2027, property income is taxed at rates 2pp higher than the standard UK rates.
+description: Property income tax rates. From April 2027, property income is taxed at rates 4pp higher than the standard UK rates (2pp from Budget 2025 and 2pp from Budget 2026), in England, Wales and Northern Ireland.
 metadata:
   label: Property Income Tax rates
   unit: /1
   reference:
     - title: OBR Economic and Fiscal Outlook November 2025
       href: https://obr.uk/efo/economic-and-fiscal-outlook-november-2025/
+    - title: Budget 2026, paragraph 6.246
+      href: https://assets.publishing.service.gov.uk/media/6ae1ec57bdb574cf1c9b3f12/E03668986_HMT_Budget_2026_ELAY__2_.pdf#page=142
 basic:
   description: The basic rate of tax on property income.
   metadata:
     label: Property basic rate
     unit: /1
   values:
     2015-04-06: 0.20
+    # Budget 2025 set 22% from 6 April 2027; Budget 2026 adds a further
+    # 2 percentage points from the same date, applying across England, Wales and Northern Ireland.
     2027-04-06:
-      value: 0.22
+      value: 0.24
       metadata:
         reference:
-          - title: OBR Economic and Fiscal Outlook November 2025
+          - title: Budget 2026, paragraph 6.246
+            href: https://assets.publishing.service.gov.uk/media/6ae1ec57bdb574cf1c9b3f12/E03668986_HMT_Budget_2026_ELAY__2_.pdf#page=142
+          - title: Budget 2026 policy costings, page 74 (from 6 April 2027)
+            href: https://assets.publishing.service.gov.uk/media/6ae1883fe4367e5c8b0467df/AB26_Policy_Costing.pdf#page=74
+          - title: Budget 2026, Table 6.1, item 61
+            href: https://assets.publishing.service.gov.uk/media/6ae187a2779378370fd80a9a/Table_6.1_and_6.2_Budget_2026_Policy_Decisions.xlsx
+          - title: OBR Economic and Fiscal Outlook November 2025 (Budget 2025's first 2 points)
             href: https://obr.uk/efo/economic-and-fiscal-outlook-november-2025/
 higher:
   description: The higher rate of tax on property income.
@@ -25,11 +35,19 @@ higher:
     unit: /1
   values:
     2015-04-06: 0.40
+    # Budget 2025 set 42% from 6 April 2027; Budget 2026 adds a further
+    # 2 percentage points from the same date, applying across England, Wales and Northern Ireland.
     2027-04-06:
-      value: 0.42
+      value: 0.44
       metadata:
         reference:
-          - title: OBR Economic and Fiscal Outlook November 2025
+          - title: Budget 2026, paragraph 6.246
+            href: https://assets.publishing.service.gov.uk/media/6ae1ec57bdb574cf1c9b3f12/E03668986_HMT_Budget_2026_ELAY__2_.pdf#page=142
+          - title: Budget 2026 policy costings, page 74 (from 6 April 2027)
+            href: https://assets.publishing.service.gov.uk/media/6ae1883fe4367e5c8b0467df/AB26_Policy_Costing.pdf#page=74
+          - title: Budget 2026, Table 6.1, item 61
+            href: https://assets.publishing.service.gov.uk/media/6ae187a2779378370fd80a9a/Table_6.1_and_6.2_Budget_2026_Policy_Decisions.xlsx
+          - title: OBR Economic and Fiscal Outlook November 2025 (Budget 2025's first 2 points)
             href: https://obr.uk/efo/economic-and-fiscal-outlook-november-2025/
 additional:
   description: The additional rate of tax on property income.
@@ -38,9 +56,17 @@ additional:
     unit: /1
   values:
     2015-04-06: 0.45
+    # Budget 2025 set 47% from 6 April 2027; Budget 2026 adds a further
+    # 2 percentage points from the same date, applying across England, Wales and Northern Ireland.
     2027-04-06:
-      value: 0.47
+      value: 0.49
       metadata:
         reference:
-          - title: OBR Economic and Fiscal Outlook November 2025
+          - title: Budget 2026, paragraph 6.246
+            href: https://assets.publishing.service.gov.uk/media/6ae1ec57bdb574cf1c9b3f12/E03668986_HMT_Budget_2026_ELAY__2_.pdf#page=142
+          - title: Budget 2026 policy costings, page 74 (from 6 April 2027)
+            href: https://assets.publishing.service.gov.uk/media/6ae1883fe4367e5c8b0467df/AB26_Policy_Costing.pdf#page=74
+          - title: Budget 2026, Table 6.1, item 61
+            href: https://assets.publishing.service.gov.uk/media/6ae187a2779378370fd80a9a/Table_6.1_and_6.2_Budget_2026_Policy_Decisions.xlsx
+          - title: OBR Economic and Fiscal Outlook November 2025 (Budget 2025's first 2 points)
             href: https://obr.uk/efo/economic-and-fiscal-outlook-november-2025/

policyengine_uk/parameters/gov/hmrc/income_tax/rates/savings.yaml

@@ -1,22 +1,32 @@
-description: Savings income tax rates. From April 2027, savings income is taxed at rates 2pp higher than the standard UK rates.
+description: Savings income tax rates. From April 2027, savings income is taxed at rates 4pp higher than the standard UK rates (2pp from Budget 2025 and 2pp from Budget 2026), across the UK.
 metadata:
   label: Savings Income Tax rates
   unit: /1
   reference:
     - title: OBR Economic and Fiscal Outlook November 2025
       href: https://obr.uk/efo/economic-and-fiscal-outlook-november-2025/
+    - title: Budget 2026, paragraph 6.247
+      href: https://assets.publishing.service.gov.uk/media/6ae1ec57bdb574cf1c9b3f12/E03668986_HMT_Budget_2026_ELAY__2_.pdf#page=142
 basic:
   description: The basic rate of tax on savings income.
   metadata:
     label: Savings basic rate
     unit: /1
   values:
     2015-04-06: 0.20
+    # Budget 2025 set 22% from 6 April 2027; Budget 2026 adds a further
+    # 2 percentage points from the same date, applying across the UK.
     2027-04-06:
-      value: 0.22
+      value: 0.24
       metadata:
         reference:
-          - title: OBR Economic and Fiscal Outlook November 2025
+          - title: Budget 2026, paragraph 6.247
+            href: https://assets.publishing.service.gov.uk/media/6ae1ec57bdb574cf1c9b3f12/E03668986_HMT_Budget_2026_ELAY__2_.pdf#page=142
+          - title: Budget 2026 policy costings, page 75 (from 6 April 2027)
+            href: https://assets.publishing.service.gov.uk/media/6ae1883fe4367e5c8b0467df/AB26_Policy_Costing.pdf#page=75
+          - title: Budget 2026, Table 6.1, item 62
+            href: https://assets.publishing.service.gov.uk/media/6ae187a2779378370fd80a9a/Table_6.1_and_6.2_Budget_2026_Policy_Decisions.xlsx
+          - title: OBR Economic and Fiscal Outlook November 2025 (Budget 2025's first 2 points)
             href: https://obr.uk/efo/economic-and-fiscal-outlook-november-2025/
 higher:
   description: The higher rate of tax on savings income.
@@ -25,11 +35,19 @@ higher:
     unit: /1
   values:
     2015-04-06: 0.40
+    # Budget 2025 set 42% from 6 April 2027; Budget 2026 adds a further
+    # 2 percentage points from the same date, applying across the UK.
     2027-04-06:
-      value: 0.42
+      value: 0.44
       metadata:
         reference:
-          - title: OBR Economic and Fiscal Outlook November 2025
+          - title: Budget 2026, paragraph 6.247
+            href: https://assets.publishing.service.gov.uk/media/6ae1ec57bdb574cf1c9b3f12/E03668986_HMT_Budget_2026_ELAY__2_.pdf#page=142
+          - title: Budget 2026 policy costings, page 75 (from 6 April 2027)
+            href: https://assets.publishing.service.gov.uk/media/6ae1883fe4367e5c8b0467df/AB26_Policy_Costing.pdf#page=75
+          - title: Budget 2026, Table 6.1, item 62
+            href: https://assets.publishing.service.gov.uk/media/6ae187a2779378370fd80a9a/Table_6.1_and_6.2_Budget_2026_Policy_Decisions.xlsx
+          - title: OBR Economic and Fiscal Outlook November 2025 (Budget 2025's first 2 points)
             href: https://obr.uk/efo/economic-and-fiscal-outlook-november-2025/
 additional:
   description: The additional rate of tax on savings income.
@@ -38,9 +56,17 @@ additional:
     unit: /1
   values:
     2015-04-06: 0.45
+    # Budget 2025 set 47% from 6 April 2027; Budget 2026 adds a further
+    # 2 percentage points from the same date, applying across the UK.
     2027-04-06:
-      value: 0.47
+      value: 0.49
       metadata:
         reference:
-          - title: OBR Economic and Fiscal Outlook November 2025
+          - title: Budget 2026, paragraph 6.247
+            href: https://assets.publishing.service.gov.uk/media/6ae1ec57bdb574cf1c9b3f12/E03668986_HMT_Budget_2026_ELAY__2_.pdf#page=142
+          - title: Budget 2026 policy costings, page 75 (from 6 April 2027)
+            href: https://assets.publishing.service.gov.uk/media/6ae1883fe4367e5c8b0467df/AB26_Policy_Costing.pdf#page=75
+          - title: Budget 2026, Table 6.1, item 62
+            href: https://assets.publishing.service.gov.uk/media/6ae187a2779378370fd80a9a/Table_6.1_and_6.2_Budget_2026_Policy_Decisions.xlsx
+          - title: OBR Economic and Fiscal Outlook November 2025 (Budget 2025's first 2 points)
             href: https://obr.uk/efo/economic-and-fiscal-outlook-november-2025/

policyengine_uk/tests/policy/baseline/finance/benefit/family/universal_credit/income/uc_earnings_deductions.yaml

@@ -291,10 +291,10 @@
     property_rental_income: 5_000
     property_income: 5_000
   output:
-    # Property: 5,000 of receipts with no expenses, so (5,000 - 1,000) x 22%
-    # = 880.
-    property_income_tax: 880
-    income_tax: 2_366
+    # Property: 5,000 of receipts with no expenses, so (5,000 - 1,000) x 24%
+    # = 960. Earnings: (20,000 - 12,570) x 20% = 1,486.
+    property_income_tax: 960
+    income_tax: 2_446
     uc_income_tax_on_earnings: 1_486
 
 - name: A tax reduction comes off the tax on earnings first

policyengine_uk/tests/policy/baseline/gov/hmrc/income_tax/allowances/property_allowance_deduction.yaml

@@ -13,8 +13,8 @@
     property_allowance_deduction: 0
     taxable_property_income: 25_000
     adjusted_net_income: 25_000
-    # (25,000 - 12,570) * 22% (property basic rate from 2027-28)
-    income_tax: 2_734.60
+    # (25,000 - 12,570) * 24% (property basic rate from 2027-28)
+    income_tax: 2_983.20
 
 - name: Profit within the allowance, receipts unknown, is fully relieved
   period: 2027

policyengine_uk/tests/policy/baseline/gov/hmrc/income_tax/property_income_band_base.yaml

@@ -94,8 +94,8 @@
         members: [person]
         country: ENGLAND
   output:
-    # Property income at the 22% property basic rate: 27,430 x 22% = 6,034.60.
-    property_income_tax: 6_034.60
+    # Property income at the 24% property basic rate: 27,430 x 24% = 6,583.20.
+    property_income_tax: 6_583.20
     dividend_income_tax: 4_528.75
 
 - name: Case 6, the annual allowance charge reads the rate on property income too.

policyengine_uk/tests/policy/baseline/gov/hmrc/income_tax/reliefs/property_finance_cost_relief.yaml

@@ -26,7 +26,7 @@
     # (30,000 - 12,570) x 20% + 14,000 x 20% - 1,600
     income_tax: 4_686
 
-- name: The same landlord in 2027-28 gets relief at the 22% property basic rate
+- name: The same landlord in 2027-28 gets relief at the 24% property basic rate
   period: 2027
   absolute_error_margin: 0.01
   input:
@@ -35,10 +35,10 @@
     property_income: 14_000
     property_finance_costs: 8_000
   output:
-    # 22% x 8,000
-    property_finance_cost_relief: 1_760
-    # (30,000 - 12,570) x 20% + 14,000 x 22% - 1,760
-    income_tax: 4_806
+    # 24% x 8,000
+    property_finance_cost_relief: 1_920
+    # (30,000 - 12,570) x 20% + 14,000 x 24% - 1,920
+    income_tax: 4_926
 
 - name: A Scottish taxpayer gets relief at the basic rate of 20% in 2025-26
   period: 2025
@@ -52,7 +52,7 @@
     pays_scottish_income_tax: true
     property_finance_cost_relief: 1_600
 
-- name: A Scottish taxpayer also gets the 22% property basic rate in 2027-28
+- name: A Scottish taxpayer also gets the 24% property basic rate in 2027-28
   period: 2027
   absolute_error_margin: 0.01
   input:
@@ -62,9 +62,9 @@
     region: SCOTLAND
   output:
     pays_scottish_income_tax: true
-    # s. 274AA(5) gives no Scottish rate: 22% x 8,000, although the property
+    # s. 274AA(5) gives no Scottish rate: 24% x 8,000, although the property
     # profits themselves are taxed at Scottish rates.
-    property_finance_cost_relief: 1_760
+    property_finance_cost_relief: 1_920
 
 - name: Relief is limited to the property profits and the rest carried forward
   period: 2025

policyengine_uk/tests/policy/baseline/gov/hmrc/isa/isa_income.yaml

@@ -63,7 +63,9 @@
     income_tax: 0
     capital_income: 100
     market_income: 100
-    isa_cash_interest_flat_rate_charge: 22
+    # SI 2026/1018 reg. 15 (new reg. 22A(3)): the savings basic rate, 24% in
+    # 2027-28, on 100.
+    isa_cash_interest_flat_rate_charge: 24
 
 - name: Noncash cash interest is an of-which detail of an explicitly supplied ISA total
   period: 2027
@@ -75,7 +77,8 @@
     taxable_savings_interest_income: 0
     capital_income: 500
     market_income: 500
-    isa_cash_interest_flat_rate_charge: 22
+    # 24% savings basic rate on the 100 of cash interest.
+    isa_cash_interest_flat_rate_charge: 24
 
 
 - name: Tax Credits and total taxable income exclude ISA returns without losing ordinary interest or dividends

policyengine_uk/tests/policy/integration/income.yaml

@@ -49,10 +49,11 @@
     savings_allowance: 500
     basic_rate_savings_income: 0
     higher_rate_savings_income: 500
-    savings_income_tax: 210
+    # 500 x 44% savings higher rate (2027-28)
+    savings_income_tax: 220
     taxed_dividend_income: 500
     dividend_income_tax: 178.75
-    income_tax: 7_874.75
+    income_tax: 7_884.75
 
 - name: Personal allowance caps savings starter rate before dividends.
   period: 2027