Income tax changes: what you need to know before 2031

Thresholds frozen until 2031

The Chancellor has confirmed that income tax thresholds will remain unchanged until April 2031. This means:

• Personal Allowance stays at £12,570
• Higher rate threshold remains at £50,270
• Additional rate threshold fixed at £125,140

As salaries rise over the coming years, more taxpayers will move into higher brackets and pay higher or additional rate income tax.

Rate increases on investment income

The Budget also introduced increases of 2 percentage points to tax rates on dividend income, savings income, and property income. Here’s what’s changing:

It remains unclear whether these increases will apply to income tax payable by trusts, and we await draft legislation and further clarification

Savings allowance retained

The Starting Rate for Savings will remain at £5,000 until April 2031. This means individuals with less than £17,570 in employment or pension income can still receive up to £5,000 of savings income tax-free.

What should you do now?

If you have significant income from dividends, property, or savings, now is the time to review your position. Consider:

• Timing of income – could you accelerate or defer income before rate changes take effect?
• Ownership structure – transferring or gifting income-producing assets may seem attractive, but beware anti-avoidance rules and potential Inheritance Tax or Capital Gains Tax implications.

Professional advice is essential before making any changes.

Our Private Wealth team is here to help you understand your options. Tax planning can be complicated, but the right support can make the process much clearer.