Legislation – Finance Act 2026
Changes to legislation:
Finance Act 2026, Schedule 1 is up to date with all changes known to be in force on or before 17 April 2026. There are changes that may be brought into force at a future date. Changes that have been made appear in the content and are referenced with annotations.
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- Pt. 15 excluded by S.I. 2026/331 reg. 19
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Whole provisions yet to be inserted into this Act (including any effects on those provisions):
- Pt. 15 excluded by S.I. 2026/331 reg. 19
Schedule 1Property and savings rates of income tax: consequential amendments
Part 1Amendments of ITA 2007
1
ITA 2007 is amended as follows.
2
(a)
in paragraph (zb), for “Welsh basic, higher and additional rates” substitute “the Welsh rates”
,
(b)
“(zd)
section 6D (property basic, higher and additional rates),”, and
(c)
in paragraph (c), after “(trust rate” insert “, property trust rate, savings trust rate”
.
3
In section 6B (the Welsh basic, higher and additional amounts)—
(a)
“(1A)
The Welsh property basic rate, the Welsh property higher rate and the Welsh property additional rate for a tax year are calculated as follows.
Step 1
Take the property basic rate, property higher rate or property additional rate.
Step 2
Deduct 10 percentage points.
Step 3
Add the Welsh rate (if any) set by Senedd Cymru for that year for the purpose of calculating the Welsh basic rate, the Welsh higher rate or the Welsh additional rate (as the case may be).”, and
(b)
for the heading substitute “The Welsh rates”
.
4
In section 9 (the trust and dividend trust rate)—
(a)
“(1A)
The property trust rate is 47%.
(1B)
The savings trust rate is 47%.”, and
(b)
in the heading, after “The trust rate” insert “, property trust rate, savings trust rate”
.
5
In section 9A (overview of sections 10 to 15), in the table—
(a)
“Rates payable on property income
Property rates
Scottish rates
Welsh property rates
Property rates
Property basic rate”, and
(b)
in the second column, in the final row, for “Default basic rate” substitute “Savings basic rate”
.
6
7
In section 11 (income charged at the default basic rate: non-individuals), in subsection (2)—
(a)
(b)
in the entry relating to Chapters 3 to 5 of Part 9, after “charged at” insert “the property trust rate, the savings trust rate or”
.
8
In section 11B (income charged at the Welsh basic, higher and additional rates)—
(a)
(b)
omit subsection (4), and
(c)
in subsection (6) —
(i)
for “Section 16 has” substitute “Sections 16 and 16A have”
, and
(ii)
for “non-savings income of a Welsh taxpayer” substitute “income of a Welsh taxpayer which is neither property income nor savings income”
.
9
“section 11CA (income charged at the property basic, higher and additional rates: individuals),”.
10
“11CBIncome charged at the Welsh property basic, higher and additional rates: individuals
(1)
Income tax is charged at the Welsh property basic rate on the income of a Welsh taxpayer which—
(a)
is property income, and
(b)
would otherwise be charged at the Welsh basic rate.
(2)
Income tax is charged at the Welsh property higher rate on the income of a Welsh taxpayer which—
(a)
is property income, and
(b)
would otherwise be charged at the Welsh higher rate.
(3)
Income tax is charged at the Welsh property additional rate on the income of a Welsh taxpayer which—
(a)
is property income, and
(b)
would otherwise be charged at the Welsh additional rate.
(4)
This section is subject to any provisions of the Income Tax Acts which provide for income to be charged at different rates of income tax in some circumstances.
(5)
Sections 16 and 16A have effect for determining the extent to which the property income of a Welsh taxpayer would otherwise be charged at the Welsh basic, higher or additional rate.
11CCIncome charged at the property basic rate: non-individuals
(1)
Income tax is charged at the property basic rate on the income of persons other than individuals which—
(a)
is property income,
(b)
would otherwise be charged at the default basic rate, and
(c)
is not relevant foreign income charged in accordance with section 832 of ITTOIA 2005 (relevant foreign income charged on the remittance basis).
(2)
This is subject to—
Chapters 3 to 5 of Part 9 (which provide for some income of trustees to be charged at special trust rates), and
any other provisions of the Income Tax Acts (apart from section 11) which provide for income of persons other than individuals to be charged at different rates of income tax in some circumstances.”
11
In section 11D (income charged at the savings basic, higher and additional rates), in the heading, at the end insert “: individuals”
.
12
“11DAIncome charged at the savings basic rate: non-individuals
(1)
Income tax is charged at the savings basic rate on the income of persons other than individuals which—
(a)
is savings income,
(b)
would otherwise be charged at the default basic rate, and
(c)
is not relevant foreign income charged in accordance with section 832 of ITTOIA 2005 (relevant foreign income charged on the remittance basis).
(2)
This is subject to—
Chapters 3 to 5 of Part 9 (which provide for some income of trustees to be charged at special trust rates), and
any other provisions of the Income Tax Acts (apart from section 11) which provide for income of persons other than individuals to be charged at different rates of income tax in some circumstances.”
13
In section 12B (individual’s entitlement to a savings allowance), in subsection (8)—
(a)
in paragraph (a)(i) and (iv) (which sets out what counts as additional-rate income), after “the additional rate” insert “, property additional rate”
, and
(b)
in paragraph (b)(i) and (iv) (which sets out what counts as higher-rate income), after “the higher rate” insert “, property higher rate”
.
14
In section 14 (income charged at the dividend ordinary rate: other persons)—
(a)
in subsection (1)(b), for “the basic rate” substitute “the default basic rate”
, and
(b)
in the heading, for “other persons” substitute “non-individuals”
.
15
In section 15 (income charged at the trust rate and the dividend trust rate)—
(a)
after “charged at the trust rate” insert “, the property trust rate, the savings trust rate”
, and
(b)
in the heading, after “charged at the trust rate” insert “, the property trust rate, the savings trust rate”
.
16
“(zb)
the rate at which income tax would be charged on the income of a Welsh taxpayer which is neither property income nor savings income apart from section 11B but taking into account the effect of section 16A,”.
17
In section 18 (meaning of “savings income”), in subsection (4)(b)—
(a)
after “personal representatives” insert “or trustees”
, and
(b)
for “or 466” substitute “, 466 or 467”
.
18
In section 31 (total income: supplementary), in subsection (2), after “the basic rate,” insert “the property basic rate, the savings basic rate,”
.
19
In section 55B (transferable tax allowance for married couples and civil partners: entitlement to tax reduction), in subsection (2)(b)—
(a)
after “other than the basic rate,” insert “the property basic rate,”
and
(b)
after “the Welsh basic rate,” insert “the Welsh property basic rate,”
.
20
In section 55C (transferable tax allowance for married couples and civil partners: election to reduce personal allowance), in subsection (1)(c)—
(a)
after “other than the basic rate,” insert “the property basic rate,”
and
(b)
after “the Welsh basic rate,” insert “the Welsh property basic rate,”
.
21
In section 399B(3) (which provides for relief for finance costs relating to residential property to be given at the basic rate for property partnerships)—
(a)
for “BR”, in both places, substitute “PBR”
, and
(b)
for “basic rate” substitute “property basic rate”
.
22
In section 462 (overview of Part 9), in subsection (3) (which explains the provision made by Chapter 3), after “charged at” insert “the property trust rate, the savings trust rate or”
.
23
In section 463 (general provision about settlements etc)—
(a)
in subsection (1), in the definition of “other income” for the words from “neither” to “nor” substitute “not property income, dividends income or”
, and
(b)
in subsection (2), after “charged at” insert “the property trust rate, the savings trust rate or”
.
24
“(2A)
Income tax is charged on the income at the property trust rate so far as the income is property income.
(2B)
Income tax is charged on the income at the savings trust rate so far as the income is savings income.”
25
“(3A)
If the amount is within Type 2, 6 or 7 as set out in section 482, income tax is charged on the amount at the savings trust rate.
(3B)
If the amount is within Type 5 as set out in section 482, income tax is charged on the amount at the property trust rate.”
26
In section 483 (sums paid by personal representatives to trustees), in subsection (1)(b), after “that income at” insert “the property trust rate, the savings trust rate or”
.
27
In section 486 (how allowable expenses are to be set against trust rate income)—
(a)
in subsection (1), in step 2, after “savings income” insert “, property income”
,
(b)
in that subsection, in step 5, in paragraph (a), for “the basic rate” substitute “the savings basic rate”
,
(c)
“Step 5A
If there are remaining expenses and there is property income—
- (a)
gross up by reference to the property basic rate so much of the remaining expenses as is necessary to give a result equal to the amount of that income, or
- (b)
if there are not enough remaining expenses to give that result, gross them all up by reference to that rate.
For the purposes of this step “the remaining expenses” are the allowable expenses so far as they have not been grossed up at Step 3, 4 or 5.”, and
(d)
in that subsection, in step 6, in the final sentence, for “or 5” substitute “, 5 or 5A”
.
28
“fourth, reduce property income (if any), and
fifth, reduce other income (if any).”
29
In section 874 (duty to deduct from certain payments of yearly interest), in subsection (2), for “the basic rate” substitute “the savings basic rate”
.
30
In section 889 (payments in respect of building society securities), in subsection (4), for “the basic rate” substitute “the savings basic rate”
.
31
In section 919 (manufactured interest on UK securities: payments by UK residents etc), in subsection (2), for “the basic rate” substitute “the savings basic rate”
.
32
In section 939 (duty to retain bonds where issue treated as payment of interest), in subsection (2), for “the basic rate” substitute “the savings basic rate”
.
33
In section 974 (Real Estate Investment Trusts: regulations under section 973), in subsection (1)(a), for “the basic rate” substitute “the property basic rate”
.
34
In section 975A (statements about certain payments of interest), in subsection (4)(b), for “the basic rate” substitute “the savings basic rate”
.
35
““property additional rate” means the rate of income tax of that name determined pursuant to section 6D,”;
““property basic rate” means the rate of income tax of that name determined pursuant to section 6D,”;
““property higher rate” means the rate of income tax of that name determined pursuant to section 6D,”;
““property income” has the meaning given by section 17A,”;
““property trust rate” means the rate of income tax specified in section 9(1A),”;
““savings trust rate” means the rate of income tax specified in section 9(1B),”;
““Welsh property additional rate” means the rate of income tax of that name determined pursuant to section 6B(1A),”;
““Welsh property basic rate” means the rate of income tax of that name determined pursuant to section 6B(1A),”;
““Welsh property higher rate” means the rate of income tax of that name determined pursuant to section 6B(1A),”.
36
“property additional rate
section 6D (as applied by section 989)
”;
“property basic rate
section 6D (as applied by section 989)
”;
“property higher rate
section 6D (as applied by section 989)
”;
“property income
section 17A (as applied by section 989)
”;
“property trust rate
section 9(1A) (as applied by section 989)
”;
“savings trust rate
section 9(1B) (as applied by section 989)
”;
“Welsh property additional rate
section 6B(1A) (as applied by section 989)
”;
“Welsh property basic rate
section 6B(1A) (as applied by section 989)
”;
“Welsh property higher rate
section 6B(1A) (as applied by section 989)
”.
Part 2Amendments of other tax legislation
TMA 1970
37
In section 7 of TMA 1970 (notice of liability to income tax and capital gains tax), in subsection (6)—
(a)
in subsection (6)—
(i)
after “other than the basic rate,” insert “the property basic rate, the savings basic rate,”
and
(ii)
after “the Welsh basic rate,” insert “the Welsh property basic rate,”
, and
(b)
“(6ZA)
A source of income falls within this subsection in relation to any person and any year of assessment if for that year—
(a)
all income from the source is savings income (see section 18 of ITA 2007), and
(b)
the person—
(i)
is UK resident,
(ii)
is not liable to tax at the savings basic rate,
(iii)
is not liable to tax at the savings higher rate,
(iv)
is not liable to tax at the savings additional rate, and
(v)
is not charged to tax under section 832 of ITTOIA 2005 (relevant foreign income charged on remittance basis) on any savings income.”
TCGA 1992
38
In section 1J of TCGA 1992 (section 1I: definitions and other supplementary provision)—
(a)
(b)
in subsection (5), in the words after paragraph (c), after “the default higher rate” insert “, the property higher rate, the savings higher rate”
.
ITTOIA 2005
39
ITTOIA 2005 is amended as follows.
40
In sections 274AA(5) and 274C(2) (which provide for relief for finance costs relating to residential property to be given at the basic rate)—
(a)
for “BR”, in both places, substitute “PBR”
, and
(b)
for “basic rate” substitute “property basic rate”
.
41
In section 465A (gains from life insurance contracts: amounts for which individuals liable to be treated as highest part of total income), in subsection (1)(b), for “the basic rate” substitute “the savings basic rate”
.
42
In section 466 (gains from life insurance contracts: personal representatives as person liable), in subsection (2), in the opening words, for “the basic rate” substitute “the savings basic rate”
.
43
In section 467 (gains from life insurance contracts: trustees as person liable), in subsection (7), for “the basic rate” substitute “the savings basic rate”
.
44
In section 530 (gains from life insurance contracts: income tax treated as paid etc), in subsection (1), for “the basic rate” substitute “the savings basic rate”
.
45
In section 533 (meaning of “comparable EEA tax charge”), in subsection (4), for “20%” substitute “22%”
.
46
In section 535 (gains from life insurance contracts: top slicing relief), in subsection (3)—
(a)
for “BRL”, in both places, substitute “SBRL”
, and
(b)
for “the basic rate” substitute “the savings basic rate”
.
47
In section 536 (gains from life insurance contracts: top slicing relief where one chargeable event), in subsection (1), in paragraph (b) of Step 2, for “the basic rate” substitute “the savings basic rate”
.
48
In section 537 (gains from life insurance contracts: top slicing relief where two or more chargeable events), in paragraph (b) of Step 2, for “the basic rate” substitute “the savings basic rate”
.
49
In section 539 (gains from life insurance contracts: relief for deficiencies), in subsection (8)—
(a)
“the property higher rate
the property basic rate”, and
(b)
“the Welsh property higher rate
the Welsh property basic rate”.
50
“(c)
income charged at the property additional rate or the property higher rate were charged at the property basic rate, and
(d)
income charged at the savings additional rate or the savings higher rate were charged at the savings basic rate.”
51
In section 680 (beneficiaries’ income etc: income treated as bearing income tax), in subsection (4), for “the basic rate” substitute “the savings basic rate”
.
52
“680CIncome treated as property income
(1)
This section applies to estate income relating to a person’s interest in the residue of an estate so far as that interest relates to income that—
(a)
falls within section 664(2)(a) (income of personal representatives charged to UK income tax), and
(b)
is property income (see section 17A of ITA 2007).
(2)
The income is treated as being property income.”
CTA 2010
53
In section 552 of CTA 2010 (distributions by Real Estate Investment Trusts)—
(a)
in subsection (2)—
(i)
for “BRT”, in both places, substitute “PBRT”
, and
(ii)
in the definition of “BRT”, for “the basic rate” substitute “the property basic rate”
, and
(b)
in subsection (3), for “BRT”, in both places, substitute “PBRT”
.
FA 2012
54
In section 102 of FA 2012 (I – E profit: policyholders’ rate of tax), in subsection (3), for “the basic rate” substitute “the savings basic rate”
.
Part 3Amendment of Scotland Act 1998
Scotland Act 1998
55
“(2B)
If income tax is charged at Scottish rates on the non-savings income of a Scottish taxpayer for a tax year (within the meaning of section 11A of the Income Tax Act 2007), those rates are treated for income tax purposes as if they were—
(a)
Scottish rates for all non-savings income other than property income which are set for the tax year at the same rates as the Scottish rates, and
(b)
separate Scottish rates for property income which are set for the tax year at the same rates as the Scottish rates,
but, subject to that, a Scottish rate resolution may not provide for different rates to apply in relation to different types of income.”