The Autumn Budget 2026, announced on 28 October, confirmed that the Personal Allowance will remain frozen until April 2031. The Chancellor also announced higher tax rates on savings income from April 2027.
Although some tax rates remain unchanged, frozen allowances and higher taxes on savings could mean a bigger tax bill for some people over the coming years.
We’ve broken down the main changes below, including what Scottish taxpayers need to be aware of.
Income Tax Allowances Remain Frozen Until 2031
The Personal Allowance, which is the amount most people can earn before paying income tax, will remain at £12,570 for the 2027/28 tax year.
For anyone earning over £100,000, the Personal Allowance will continue to reduce by £1 for every £2 of adjusted net income above that amount.
Even if tax rates don’t increase, keeping allowances frozen can still mean paying more tax over time.
As your earnings rise, more of your income may become taxable, or you could find yourself moving into a higher tax band. This is known as fiscal drag.
Scotland has its own income tax rates and bands for earnings from employment, self-employment and pensions. While the Personal Allowance is set by the UK Government, the Scottish Government decides the rates and bands for these types of income.
The Scottish income tax rates and bands for 2027/28 have not yet been announced. These are expected to be confirmed in the Scottish Budget on 3 December 2026.
We’ll have a clearer picture of how the changes could affect Scottish taxpayers once those announcements have been made.
Savings Income Tax Rates Will Increase from April 2027
If you earn interest on savings held outside tax-free accounts, the Budget’s changes could affect how much tax you pay.
From 6 April 2027, tax rates on savings income will rise to:
| Tax band | 2026/27 | 2027/28 |
| Basic rate | 20% | 24% |
| Higher rate | 40% | 44% |
| Additional rate | 45% | 49% |
These increases build on changes announced in the 2025 Budget, meaning the rates applying from April 2027 will be higher than originally planned.
The good news is that the Personal Savings Allowance will remain unchanged:
- Basic-rate taxpayers: Up to £1,000 of savings interest tax-free.
- Higher-rate taxpayers: Up to £500 of savings interest tax-free.
- Additional-rate taxpayers: No Personal Savings Allowance.
The starting rate for savings will also remain at 0% on up to £5,000 of eligible savings income, depending on how much other income you receive.
For many savers, this means there will still be no tax to pay on their interest. However, if your savings income exceeds the allowances available to you, you could face a higher tax bill from April 2027.
It’s worth checking how much interest you’re earning and whether you’re making the most of tax-efficient savings options, such as ISAs.
Property Income Tax Changes for Scottish Landlords
The Budget also included changes to the taxation of property income, although the rates that will apply to Scottish taxpayers from April 2027 have not yet been confirmed.
The Scottish Government has the power to set separate income tax rates on property income, with further details expected as part of the Scottish Budget.
For now, Scottish landlords should be aware that changes may be coming, but it’s too early to know exactly how their tax bills could be affected.
The Property Allowance will remain at £1,000 for 2027/28.
If you receive rental income, it’s worth keeping an eye on the Scottish Budget announcements in December. Once the rates are confirmed, you’ll have a clearer picture of how much tax you may need to pay on your rental profits.
Dividend Tax Rates Remain Unchanged
Unlike savings income, dividend tax rates won’t increase further in 2027/28.
The rates will remain:
| Tax band | Dividend tax rate |
| Basic rate | 10.75% |
| Higher rate | 35.75% |
| Additional rate | 39.35% |
The Dividend Allowance will also stay at £500.
These rates are particularly relevant if you receive income from investments or run a limited company and take part of your income through dividends.
Although there are no further increases this year, it’s still worth reviewing how you take income from your company. The balance between salary and dividends can make a difference to your overall tax bill.
Planning Ahead for the Changes
Most of these changes won’t take effect until April 2027, giving you time to understand how they could affect your finances.
Whether you’re employed, self-employed, receiving rental income or running a limited company, being aware of the upcoming changes can help you plan ahead.
The Scottish Budget on 3 December 2026 will also provide more clarity on the rules affecting Scottish taxpayers.
Tax changes aren’t always straightforward. At AMMU, we help individuals and businesses across Glasgow, Ayrshire and beyond understand their tax obligations and make informed financial decisions.
If you’re unsure how the Autumn Budget 2026 could affect you or your business, get in touch with our team.
You can also download our Autumn Budget 2026 Summary for a full breakdown of the announcements.