Policy paper

Changes to legislation resulting from new savings and property rates

Published 28 October 2026

Who is likely to be affected 

Those impacted include: 

• life insurance companies which issue chargeable event certificates or deduct sums representing Income Tax from purchased life annuity payments, and policyholders receiving those certificates or payments 

• issuers and holders of certain securities paying UK public revenue dividends 

• individuals or trustees holding certain foreign life insurance policies with a European Economic Area (EEA) insurer 

• individuals in scope of the Transfer of Assets Abroad legislation 

General description of the measure 

This measure makes 5 amendments to tax legislation following the Budget 2025 announcement that the savings basic rate of Income Tax would increase from 6 April 2027 and that separate tax rates for property income would be introduced from the same date.  

First, it will make sure that references on chargeable event certificates to tax treated as paid will be to the savings basic rate.  

Second, it will make sure that the ‘comparable EEA tax charge’ used in determining whether tax is treated as paid on gains from certain foreign life insurance policies references the savings basic rate rather than a percentage. 

Third, changes are made to the Transfer of Assets Abroad legislation so that income taxed at the new property basic rate or the savings basic rate is treated in the same way as income taxed at the main basic rate or the starting rate for savings. This prevents a duplicate charge where the underlying income of the person abroad has already borne tax at the property basic rate or the savings basic rate and makes sure that the amount of tax borne is set off against the Income Tax liability arising to individuals under the Transfer of Assets Abroad legislation. 

Fourth, it will provide that sums representing Income Tax deducted from certain UK public revenue dividends will be at the savings basic rate.   

Fifth, it will provide that sums representing Income Tax deducted from certain purchased life annuity payments will be at the savings basic rate. 

Policy objective 

The measure makes sure that the rules on insurers’ reporting, tax treated as paid on gains from certain foreign life insurance policies, deduction at source, and the Transfer of Assets Abroad legislation continue to operate as intended from 6 April 2027.  

Background to the measure 

At Budget 2025, the government announced that the rates of Income Tax applying to savings income would increase from 6 April 2027 and that separate tax rates for property income would be introduced from the same date. 

This measure contains amendments relating to chargeable event certificates, tax treated as paid on gains from certain foreign life insurance policies, purchased life annuities, certain UK public revenue dividends, and the Transfer of Assets Abroad legislation. 

Detailed proposal 

Operative date 

The chargeable event certificates provision will have effect for chargeable events occurring (or treated as occurring) on or after 6 April 2027. The amendments relating to the tax treated as paid on gains from certain foreign life insurance policies, purchased life annuities, certain UK public revenue dividends, and the Transfer of Assets Abroad legislation will have effect for the tax year 2027 to 2028 and subsequent tax years. 

Current law  

Current law on chargeable event certificates is contained in section 552 of the Income and Corporation Taxes Act 1988.   

Current law on tax treated as paid on gains from certain foreign life insurance policies is contained in sections 530 to 533 Income Tax (Trading and Other Income) Act 2005. 

Current law on Transfer of Assets Abroad is contained in Chapter 2 of Part 13 of the Income Tax Act 2007. 

Current law on the deduction of sums representing Income Tax from certain UK public revenue dividends is contained in section 892 of the Income Tax Act 2007.  

Current law on the deduction of sums representing Income Tax from annual payments made by persons other than individuals is contained in section 901 of the Income Tax Act 2007. Purchased life annuities are defined in section 423 of the Income Tax (Trading and Other Income) Act 2005.   

Proposed revisions 

First, legislation will amend section 552(5)(f)(i) of the Income and Corporation Taxes Act 1988 so that chargeable event certificates refer to the savings basic rate of Income Tax when stating whether an individual is treated as having paid tax on a gain.  

Second, legislation will amend section 533 of the Income Tax (Trading and Other Income) Act 2005 so that it refers to the savings basic rate rather than a percentage. 

Third, legislation will amend section 745 of the Income Tax Act 2007 so that it includes a reference to Income Tax at the property basic rate or savings basic rate not being charged under section 720 or section 727 Income Tax Act 2007. This amendment will apply in respect of any income of the person abroad that has borne tax at the property basic rate or savings basic rate as currently applies to income of the person abroad that has borne tax at the basic rate or the starting rate for savings when that rate is more than 0%. 

Fourth, legislation will amend section 892 of the Income Tax Act 2007 so that sums representing Income Tax are deducted from certain UK public revenue dividends at the savings basic rate. 

Fifth, legislation will amend section 901(4) of the Income Tax Act 2007 and insert section 902 so that sums representing Income Tax are deducted at the savings basic rate from purchased life annuity payments where the payment either is savings income, or would be savings income if received by an individual within the charge to Income Tax. 

The legislation will be introduced in Finance Bill 2026-27. 

Summary of impacts 

Exchequer impact (£million) 

2026 to 2027	2027 to 2028	2028 to 2029	2029 to 2030	2030 to 2031	2031 to 2032
nil	nil	nil	nil	nil	nil

This measure is not expected to have an Exchequer impact.  

Economic impact 

This measure is not expected to have any significant macroeconomic impacts. 

Impact on individuals, households and families 

The changes affect policyholders who receive chargeable event certificates, individuals or trustees who hold certain foreign life insurance policies, those who receive payments from purchased life annuities, and those who receive payments from certain UK public revenue dividends. Those impacted will not need to take any additional action since this measure deals with amending the legislation to make sure that it works as intended.   

The changes to the Transfer of Assets Abroad legislation affect individuals who are in scope of those provisions. These individuals will not need to take any additional action because the measure amends the legislation to make sure that it operates as intended following the changes to the savings rates and the introduction of separate rates for property income. There is no impact on businesses because the measure only affects the computation of individuals’ income tax liability under the Transfer of Assets Abroad legislation.  

This measure is not expected to have any impact on family formation, stability or breakdown. 

This measure is expected overall to have no impact on individuals’ experience of dealing with HMRC as the changes make sure the legislation continues to work as intended.   

Equalities impacts 

It is not anticipated that there will be impacts on those in groups sharing protected characteristics from amending the legislation to make sure it works as intended.  

Administrative impact on business including civil society organisations 

This measure is expected to have a negligible impact on life insurance companies responsible for issuing chargeable event certificates or deducting sums representing Income Tax from purchased life annuity payments.  

One-off costs are expected to arise for those familiarising themselves with the changes, updating chargeable event certificate wording, and updating processes for deducting sums representing Income Tax from purchased life annuity payments. There are expected to be no ongoing costs or savings. 

There is expected to be no impact on businesses arising from the changes to the tax treated as paid on gains from certain foreign life insurance policies and the Transfer of Assets Abroad legislation. 

This measure is not expected to disproportionately impact civil society organisations.  

This measure is expected overall to have no impact on businesses’ experience of dealing with HMRC as the change is to make sure that the legislation works as intended. 

Operational impact (£million) (HMRC or other) 

This measure is expected to have no operational impact on HMRC.   

Other impacts 

Other impacts have been considered and none have been identified.  

Monitoring and evaluation 

The measure will be monitored and assessed alongside other measures in the government’s package of changes to the taxation of savings income and property income.  

Further advice 

If you have any questions about the changes to the Transfer of Assets Abroad legislation, contact Personal Tax International by email personaltaxinternational@hmrc.gov.uk.  

If you have any questions about any of the other changes, contact the Financial Services Team by email financialservicesbai@hmrc.gov.uk.