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UK NRIs

UK Budget 2026 puts your Indian rent and deposit interest in a higher tax bracket

Tax on property and savings income rises again from April. For UK NRIs that covers Indian rent and NRE, NRO and FD interest, which the UK taxes too.

Illustration of a red Budget box with a pound coin in front of the Houses of Parliament at dusk, with rupee and pound coins, a small house marked with a rupee sign and a rising arrow over a city skyline

NRIWallah team

Updated October 2026 · 3 min read

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Most Budget coverage today will be about the banks, the gambling levy and who pays for devolution. For a UK NRI, one line matters more than the rest. Tax on income from property and savings goes up again from April, by 2 percentage points on top of the 2 announced last year. The rates become 24% for basic-rate taxpayers, 44% for higher-rate and 49% for additional-rate, up from 20%, 40% and 45% today.

The part other summaries will miss is who counts. If you are UK resident, you are taxed in the UK on property and savings income wherever it arises. That includes the rent on your flat in Pune and the interest on your NRE, NRO or FD accounts in India.

What it adds to a £1,000 of income

Tax bandTodayFrom April 2027Extra per £1,000
Basic rate20% (£200)24% (£240)£40
Higher rate40% (£400)44% (£440)£40
Additional rate45% (£450)49% (£490)£40

India’s tax does not move, so the credit you claim for it does not grow. The UK credits Indian tax only up to the UK tax on the same income, so where Indian tax is below the UK rate, the whole increase falls on you as extra UK tax. Our guide to Indian rent taxed abroad shows how that credit works.

Who is hit, and who is not

  • You are UK resident and earn Indian rent or interest. Hit, from April 2027. NRE interest is tax-free in India but not in the UK.
  • You rent out a UK property, here or from abroad. Hit. The same rates apply to UK property income.
  • You are in your first four years of UK residence and claimed relief on foreign income. Your Indian income is not taxed in the UK for those years, so you are shielded, though UK income is not.
  • You hold savings inside an ISA. Not hit. The income is tax-free.

The cash ISA stays at £20,000

The planned cut in the cash ISA allowance to £12,000 has been dropped, so the £20,000 limit stays. For a UK NRI, an ISA is the one place UK interest is tax-free, which makes it worth comparing with an Indian deposit once UK tax on that deposit rises. Our FD versus savings guide sets out the comparison. Remember that you cannot pay into an ISA once you stop being UK resident.

What was not announced

As we write, we have seen no change to the four-year relief for new arrivals or to the residence-based inheritance tax rules, and no exit tax or wealth tax. That matters for anyone planning a move in or out. Neither was ruled out for the future. The change already due from April 2027 is that most unused pension funds will count towards your estate for inheritance tax, which is worth reading alongside our inheritance tax guide if you hold UK pensions and Indian assets.

Before April

  1. List every property and savings income stream, including Indian rent, NRO and NRE interest and FD interest.
  2. Check your status. If you are in your first four years of UK residence, check whether you claimed relief on foreign income.
  3. Re-run your numbers with the UK NRI tax calculator for 2026-27 and the DTAA estimator, and use the NRI day tracker to confirm you are UK resident this year.
  4. Keep your Indian tax records. Form 16A certificates and Indian return acknowledgements support the credit you claim.

General information, not tax or investment advice. This was written on Budget day from early reports. Rates, dates and details can change when the Budget documents are published, so check them or speak to a qualified UK tax adviser.

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