UK Budget 2025

keirafry2
Nov 27
2 min read

UK Budget 2025: Why Property Remains a Strong Investment Despite Tax Changes

The UK government has announced a 2 percentage-point increase in tax rates on dividends, property, and savings income starting April next year. While this might sound like a challenge for investors, property remains one of the most resilient and rewarding investment options—and here’s why.

Why the Change?

Finance Minister Rachel Reeves explained that the move is about fairness, aligning taxes on income sources that currently avoid National Insurance contributions. But even with this adjustment, property continues to offer advantages that other investments simply can’t match.

What Are the New Rates?

Dividend Tax:
- Basic rate: 10.75%
- Higher rate: 35.75%
Property and savings income will also see a 2 percentage-point increase across all bands.

Why Property Still Wins

Unlike volatile markets or low-yield savings accounts, property offers tangible assets, long-term growth, and consistent rental income. Even with a slight tax increase, property investments often outperform other asset classes thanks to:

Capital Appreciation: Property values historically rise over time.
Rental Income Stability: Demand for housing remains strong.
Tax-Efficient Strategies: Options like incorporating property into a company structure or leveraging allowable expenses can help offset tax changes.

90% of Savers Unaffected

Reeves reassured that 90% of taxpayers will still pay no tax on their savings, but for serious investors, property remains the cornerstone of wealth-building—especially when compared to dividend-heavy portfolios that face steeper tax hikes.

Bottom Line:

Tax changes are part of the landscape, but property continues to deliver security and growth. If you’re considering expanding your portfolio, now is the perfect time to explore opportunities before demand surges.