UK Budget raises rental income tax for UAE Britons, preserves £20,000 cash ISA limit

What changes for overseas landlords

The Budget raises the tax rates on savings and property income by another two percentage points. For property income in England, Wales and Northern Ireland, the rates from April 6, 2027, will be 24% for basic-rate taxpayers, 44% for higher-rate taxpayers and 49% for additional-rate taxpayers.

That doubles the increase previously planned. The 2025 Budget had set property income rates of 22%, 42% and 47% for the same start date. According to Tax Policy Associates, landlords' finance cost relief, including relief on mortgage interest, will remain linked to the property basic rate and therefore rise to 24%.

UK rental income remains subject to UK tax even when the landlord lives overseas. Rent can be paid after tax has been withheld, or landlords can obtain HM Revenue and Customs' approval to collect the full amount and settle their liability through Self Assessment.

The government will amend secondary legislation to bring withholding under the Non-Resident Landlords Scheme into line with the new property basic rate. The change will also cover withholding on property income distributions from real estate investment trusts and property authorized investment funds, according to GOV.UK.

HMRC estimates that the new property income rates will increase tax for 2.4 million landlords by 2029-30, representing 6% of taxpayers. Separately, the Office for Budget Responsibility considers it "more likely than not" that the increase, alongside other recent changes, will raise rents over the long term, Tax Policy Associates reported.

Tony Smith, head of tax, technical and advice delivery at St James's Place - Asia & Middle East, said the additional increase warrants attention, especially from people receiving UK rent. For UAE-based owners, the relevant question is how much income their properties will provide after tax toward living expenses, mortgage payments or retirement.

Cash ISAs and plans to return

Healey abandoned the reduction in the cash Individual Savings Account allowance announced in the 2025 Budget. It would have lowered the annual limit from £20,000 to £12,000 for savers under 65 beginning April 6, 2027. The government also dropped the associated anti-circumvention rules, including a 22% charge on interest earned on cash held in stocks and shares ISAs.

The retained allowance does not give British citizens overseas an automatic right to make deposits. Eligibility depends on residence, not simply on holding a British passport.

Someone who becomes non-UK resident can generally retain existing ISAs, along with UK tax relief on the savings and investments already inside them. New contributions are usually prohibited during nonresidence, with exceptions for Crown employees working overseas and their spouses or civil partners. Contributions can generally resume after a return to UK residence, within the annual allowance.

"Retaining the £20,000 annual cash ISA allowance, rather than proceeding with the planned reduction, is also relevant for those considering an eventual return, when they can generally resume contributions once UK resident again," Smith said.

Smith described the Budget's focus on energy, living costs and greater devolution as primarily domestic, making it unlikely to fundamentally change many British expats' long-term plans. In his view, the policies left unchanged could matter as much to UAE-based Britons as the new measures.

He cited St James's Place's Money on the Move 2026 research, in which 78% of affluent and high-net-worth expats surveyed in the UAE expected to stay abroad for at least eight more years. That result applies to the surveyed group, not to British expats as a whole.

Smith said those families need financial plans that account for where they keep savings, where they expect to retire and whether they may return to Britain. A Budget can affect preparations for those decisions even when it does not change the plans themselves.

Energy payments and changes to household bills

In England, up to 20 million households in council tax bands A through D will receive a one-time £100 Household Energy Payment. The £2.6 billion scheme will make payments directly into bank accounts starting in January 2027. Similar support elsewhere in the UK will receive funding, while an additional £100 million will go to local authorities to help households most acutely affected by higher energy bills.

The temporary 0% VAT rate on domestic electricity will remain in place until July 1, 2027. The government's Budget document estimates that the extension will take about £50 off the annual Ofgem price cap in April 2027.

To fund the energy measures, the government will temporarily double the Bank Corporation Tax Surcharge from 3% to 6%. The increase will last 15 months, from January 1, 2027, through March 31, 2028, and is expected to raise approximately £1.5 billion.

The government also plans to ask Ofgem to remove gas standing charges and incorporate those costs into unit prices. That would replace the fixed daily charge with a different way of collecting the costs, rather than guarantee a lower total bill for every customer.

Business rates and high-street support

For UAE-based Britons with UK business interests, the Budget arrives amid retailers' calls for changes to the cost of operating in town centers. Savills figures reported by Bloomberg show that more than one in 10 UK high-street shops is vacant. Retailers are contending with higher costs and shifts in shopping habits, while business leaders are seeking broader reform of business rates, the tax on commercial premises.

Richard Walker, executive chairman of Iceland Foods, told Bloomberg Radio: "It has to be wholesale reform, not just tinkering around the edges of our business-rate taxation in the UK."

Under an earlier announcement, pubs and social clubs in England are scheduled to receive a 20% business-rates reduction starting in April 2027. Restaurants are not included, Bloomberg reported.

Burnham has also announced a separate £210 million package aimed at reviving high streets by redeveloping derelict buildings and helping prevent business closures. Those initiatives belong to a broader regeneration program; they do not change expats' personal tax obligations.