Significant changes to tax and savings regulations will take effect from April 2027, affecting buy-to-let landlords, sole traders, and savers across the UK. Financial advisers are urging affected parties to review their arrangements now rather than waiting until implementation.
Jason Hollands at wealth management firm Evelyn Partners said: “April 2027 may feel some way off, but when it comes to financial planning, a year is not a long time. The changes on the horizon are significant and, for many people, will require a rethink of strategies that may have been in place for many years.”
Cash ISA allowances reduced
From 6 April 2027, individuals under 65 will face a reduced cash ISA limit of £12,000, down from the current £20,000 annual allowance. Any amount above £12,000 will need to be directed into stocks and shares ISAs. Those aged 65 and over will retain access to the full £20,000 cash ISA allowance.
Easy-access cash ISAs currently pay up to approximately 4.5%. Interest earned outside an ISA is subject to tax once the personal savings allowance is exceeded, which stands at £1,000 for basic-rate taxpayers and £500 for higher-rate taxpayers.
Higher tax rates on rental income
The government will increase income tax rates on savings and rental income by 2 percentage points from April 2027, as part of efforts to narrow the gap between tax paid on employment income and income from assets.
Following the changes, basic-rate taxpayers will pay 22% on rental income, higher-rate taxpayers 42%, and additional rate taxpayers 47%, after allowances. The changes represent the latest in a series of adjustments affecting buy-to-let landlords, with some landlords reassessing their portfolio strategies in response to the shifting regulatory environment.
Hollands noted: “Many landlords are reassessing their position. While options such as transferring ownership between spouses or incorporating portfolios into company structures may help in some cases, these decisions are complex and need careful consideration. Some property investors may simply decide to sell up.”
Making Tax Digital threshold lowered
The Making Tax Digital system, which launched this month, requires sole traders and landlords to report income and expenses to HMRC digitally. The current threshold of £50,000 will fall to £30,000 on 6 April 2027 for self-employment and property income earned in the 2025-26 tax year.
The changes come as UK property market conditions continue to evolve, with landlords facing multiple regulatory and tax pressures.
Clare Stinton at investment platform Hargreaves Lansdown described the current tax year as a “use it or lose it” moment for cash ISAs, advising savers to conduct an audit of their savings arrangements before the deadline.
Conclusion
With approximately one year until implementation, landlords and property investors have a limited window to review their tax structures and consider whether portfolio restructuring or disposal may be appropriate given the incoming changes to rental income taxation and digital reporting requirements.
