Landlord Tax Rising To 24%: How Much More You Will Pay On Your Rent From April 2027
Index
For the 2026/27 tax year, your rental profit is still taxed at 20%, 40% or 45%. From 6 April 2027, landlords in England, Wales and Northern Ireland move to separate property rates of 24%, 44% and 49%. For most landlords, the extra tax is 4% of rental profit after mortgage interest.
The rates were announced in the Budget 2026 document published by HM Treasury on 28 October 2026, which states that the property basic rate will be 24%, the property higher rate 44% and the property additional rate 49% from 6 April 2027, to be legislated in Finance Bill 2026-27. They replace the 22%, 42% and 47% property rates set at Budget 2025, which were never charged.
If you let property in your own name, alone or jointly, this applies to you. If your properties sit inside a limited company, the company pays Corporation Tax and these rates do not touch its profits.
What changes on 6 April 2027, and what stays the same?
Property income is the profit from letting land or buildings after allowable expenses, whether the property is in the UK or overseas. Since the furnished holiday lettings regime ended in April 2025, holiday let profits are ordinary property income too.
2026/27 | 2027/28 as set at Budget 2025 | 2027/28 after Budget 2026 | |
Property basic rate | 20% | 22% | 24% |
Property higher rate | 40% | 42% | 44% |
Property additional rate | 45% | 47% | 49% |
Finance cost relief on mortgage interest | 20% | 22% | 24% |
The bands themselves do not move. For both 2026/27 and 2027/28, the personal allowance is £12,570, the higher rate applies to taxable income above £50,270 and the additional rate to income above £125,140. Rent is still not subject to National Insurance, and the £1,000 property allowance and the Rent a Room scheme are unchanged.
The Treasury's own costings, published in the supporting documents for Budget 2026, put the yield from the property rate rise at £35 million in 2027-28 and £575 million in 2028-29. That jump is a timing effect. Most landlords pay through Self Assessment, so tax on 2027/28 rent mostly reaches HMRC in January 2029, which matters for your cash flow and is explained below.
The 2027 Landlord Tax Impact Calculator
This interactive dashboard helps UK landlords project exactly how the April 2027 property tax rate increases will impact their rental profits and cash flow. By entering your annual salary, rental profit, and mortgage interest, the calculator instantly reveals your extra Income Tax burden and visualises your cash retention. Use the built-in tabs to explore the January 2029 payment spike, test mitigation strategies like cash-basis repairs, and check if the new Making Tax Digital (MTD) rules apply to your portfolio.
How much more will you pay? The 4% rule
Two figures move together. The rate on your rental profit rises by 4 points compared with 2026/27, and finance cost relief rises by the same 4 points, from 20% to 24%. Finance cost relief is the tax reduction for mortgage interest that replaced deducting interest as an expense under the rules known as Section 24, and HMRC's technical note on the new property rates confirms it is given at the property basic rate, not at your top rate.
Because both figures rise by 4 points and the bands are frozen, the extra Income Tax for 2027/28 is 4% of your taxable rental profit, less 4% of the finance costs that receive relief. For most landlords that is simply 4% of what is left after mortgage interest, whichever band you are in.
Example landlord (rental profit is before mortgage interest) | Extra Income Tax in 2027/28 compared with 2026/27 |
Basic rate: £30,000 salary, £12,000 rental profit, £5,000 interest | £280 |
Higher rate: £60,000 salary, £24,000 rental profit, £15,000 interest | £360 |
Rent is the only income: £40,000 rental profit, no mortgage | £1,097.20 |
Additional rate: £150,000 salary, £30,000 rental profit, no mortgage | £1,200 |
Higher rate: £60,000 salary, £10,000 rental profit, £14,000 interest | £0 |
Worked example: a higher-rate landlord with a mortgage
Example: a landlord earns a £60,000 salary and lets a flat that produces £24,000 of profit after letting fees, repairs and insurance, but before £15,000 of mortgage interest. Total income is £84,000, so all the rental profit sits in the higher rate band. The cash actually left after interest is £9,000.
● 2026/27: 40% of £24,000 is £9,600, less finance cost relief of 20% of £15,000 (£3,000), giving tax of £6,600.
● 2027/28: 44% of £24,000 is £10,560, less relief of 24% of £15,000 (£3,600), giving tax of £6,960.
The increase is £360, which is 4% of the £9,000. Had the Budget 2025 rates stood, the 2027/28 bill would have been £6,780, so Budget 2026 itself adds £180. On My Tax Accountant's figures, this landlord's tax takes 77.3% of the cash profit in 2027/28, up from 73.3% in 2026/27, and that is the number to weigh when deciding whether a mortgaged property still earns its place.
Where the answer changes: interest higher than rental profit
Finance cost relief is capped. It is worked out at the property basic rate on the lowest of three figures: your finance costs for the year plus any brought forward, your property profits, and your adjusted total income above the personal allowance. In the worked example above the interest of £15,000 is the lowest figure, so it is relieved in full.
Example: the same £60,000 salary, but the flat makes £10,000 of profit before £14,000 of interest. Relief is capped at 24% of £10,000, which is £2,400. Tax is £4,400 less £2,400, so £2,000, exactly what the 2026/27 rules produce (£4,000 less £2,000). The rise costs nothing in 2027/28, although you pay £2,000 on a property losing £4,000 in cash.
The £4,000 of unrelieved interest carries forward and, used in a later year, is worth £960 at 24% rather than £800 at 20%. This is the decision boundary: while interest exceeds rental profit, the new rates make no difference that year. The cost arrives once rents rise or the loan reduces and profit overtakes interest.
Key Tax Changes for Unincorporated Landlords
Starting 6 April 2027 (the 2027/28 tax year), rental profits earned by individuals will no longer be taxed at standard income tax rates applying to earnings or pensions. Instead, rental income will be governed by a separate tier of property income tax rates.
Income Tax Band | Taxable Income Threshold | Current Rates (2026/27) | Budget 2025 Planned Rates | Budget 2026 Confirmed Rates | Net Change vs. Current |
Basic Rate | £12,571 to £50,270 | 20% | 22% | 24% | +4% |
Higher Rate | £50,271 to £125,140 | 40% | 42% | 44% | +4% |
Additional Rate | Over £125,140 | 45% | 47% | 49% | +4% |
Trust Rate (Property) | Discretionary / Accumulated | 45% | 47% | 49% | +4% |
Note: Income tax bands reflect standard Personal Allowance thresholds. Scotland and Wales possess devolved tax powers; Scottish taxpayers are subject to separate bands set by the Scottish Parliament.
Does your personal allowance still cover rental income?
From 6 April 2027, the personal allowance (the first £12,570 of income on which you pay no Income Tax) is set against your salary, self-employed profits and pension first, and only what is left goes against rent. HMRC's technical note sets out this order.
If your earnings or pension already use the full £12,570, every pound of taxable rent is charged at property rates. If rent is your only income, the allowance still shelters the first £12,570 of it. That is the third line of the table: taxable rent of £27,430 costs 4% more, £1,097.20, taking the bill from £5,486 to £6,583.20.
The order cannot be reversed to your advantage. You cannot use the allowance against rent taxed at 24% and leave salary taxed at 20% to carry the tax.
When will you actually pay the extra tax?
Not on 6 April 2027. If you pay through Self Assessment with payments on account (two advance instalments a year, each half of last year's bill), the increase arrives late and largely in one go. Using the higher-rate worked example, and assuming payments on account apply:
31 January 2028: first payment on account for 2027/28 of £3,300, based on the 2026/27 bill of £6,600, so still at the old rates.
31 July 2028: second payment on account of £3,300.
31 January 2029: balancing payment for 2027/28 of £360, plus the first payment on account for 2028/29 of £3,480 (half of £6,960). That is £3,840 on one day, against £3,300 a year earlier.
Payments on account are not required if your previous Self Assessment bill was under £1,000, or if more than 80% of your tax was collected at source. If HMRC collects your rental tax through your PAYE tax code instead, the increase appears in your 2027/28 code, and it is worth checking that code against your own figures when it arrives.
The video in this section walks through that payment timeline using the worked example above. Its conclusion is that the first full bill at the new rates falls due on 31 January 2029, so the extra 4% is best set aside month by month from April 2027.
6 April 2027 is also the date Making Tax Digital for Income Tax (MTD IT) reaches far more landlords. Under HMRC's guidance on when you need to use MTD for Income Tax, you must use it from 6 April 2027 if your qualifying income, meaning gross rents plus any self-employed turnover before expenses, was more than £30,000 on your 2025/26 return. HMRC estimates that around 1,077,000 more sole traders and landlords join from that date.
Quarterly updates do not change when you pay tax. Budget 2026 confirmed that people joining MTD IT in April 2027 will not receive penalty points for late submission of their first four quarterly updates for 2027/28.
Can you reduce the impact before 6 April 2027?
There are three levers, and each has a point at which it stops working.
Timing repairs and costs. Landlords with rental receipts of £150,000 or less use the cash basis by default, so rent is taxed when received and costs are relieved when paid. On the cash basis, a discretionary cost paid on or after 6 April 2027 gets relief at the new rates. A £6,000 redecoration earns a higher-rate landlord £2,640 of relief if paid in April 2027, against £2,400 if paid in March 2027, a gain of £240. If you use the accruals basis, income and costs follow the period they relate to, and moving a payment date achieves nothing. Pressing tenants to pay rent early is not worth it: at best it saves 4% once.
Sharing income with a spouse or civil partner. Property owned jointly by a married couple or civil partners is taxed 50:50 by default. If you genuinely own it as tenants in common in unequal shares, you can be taxed on your real shares by filing Form 17, HMRC's declaration of beneficial interests in joint property and income, with evidence such as a declaration of trust. Where one partner pays 44% and the other has unused basic rate band, each £10,000 of rental profit taxed on the lower-rate partner instead saves £2,000 in 2027/28. The change of ownership must be real, usually needs lender consent and can bring Stamp Duty Land Tax where mortgage debt is taken over; that is a separate matter needing its own analysis.
Moving to a limited company. A company deducts interest in full against Corporation Tax, but transferring existing properties usually triggers Capital Gains Tax and Stamp Duty Land Tax, and drawing profit out brings dividend tax. A 4 point rate rise alone rarely justifies it, and it is a separate question.
The arithmetic above is manageable for one property, one mortgage and one other income. It stops being safe to do alone once you have several properties, interest above profit in some years, finance costs brought forward, income near £100,000 where the personal allowance starts to be withdrawn, or a Form 17 or company decision to make, because each of these changes which figure the relief cap uses and which band your rent falls into. My Tax Accountant's landlord Self Assessment service covers this: we prepare your rental accounts on the right basis, calculate finance cost relief and any amount carried forward, project your 2027/28 bill and payments on account at the new rates, confirm whether MTD IT applies to you from 6 April 2027, and file your return.
The Landlord Tax Payment Timeline & Mitigation Planner
This interactive planner maps out exactly when the April 2027 tax increases will hit your bank account, highlighting the significant payment spike scheduled for January 2029. By inputting your current and projected tax bills, the tool generates a personalised timeline chart for your Payments on Account so you can manage your cash flow effectively. It also features a mitigation calculator to reveal how much extra tax relief you can secure by timing property repairs under the cash basis, alongside a quick Making Tax Digital (MTD) compliance checker.
What is the position in Scotland and Wales?
Whether you are a Scottish taxpayer depends on where you live, not where the property is. If you are, the UK rates of 24%, 44% and 49% do not apply to your rental profit. HMRC's technical note says the Scottish Government can set property income rates in line with its existing Income Tax powers, and its 2027/28 budget is expected on 3 December 2026. A landlord living in England who lets a flat in Glasgow pays the UK property rates; a landlord living in Edinburgh who lets in Manchester pays whatever Scotland sets. The rise in savings rates to 24%, 44% and 49% is UK-wide, so it reaches Scottish taxpayers' interest income either way.
The Budget 2026 document applies the 24%, 44% and 49% rates in Wales. The Welsh Government can also set property income rates within its existing powers, so check the Welsh draft budget for 2027/28; unless it sets different figures, plan on the UK rates.
What to do now
By 31 January 2027: file your 2025/26 return and pay what is due. The gross rents on that return decide whether MTD IT applies from 6 April 2027.
Before 5 April 2027: confirm whether your rental accounts use the cash or accruals basis, and schedule discretionary repairs accordingly. If you are considering Form 17, take advice and make sure it reaches HMRC within 60 days of the later of your two signatures.
Before 6 April 2027: if your qualifying income was over £30,000 in 2025/26, sign up for MTD IT and choose compatible software.
By 7 August 2027: if you are in MTD IT, send your first quarterly update, covering 6 April to 5 July 2027.
From April 2027: add 4% of your rental profit after mortgage interest to whatever you already set aside, ready for 31 January 2029.
Free Download Report on Landlord Tax Rising To 24%: How Much More You Will Pay On Your Rent From April 2027 (by My Tax Accountant)
FAQs
I have unused rental losses from earlier years. Are they worth more after April 2027?
Yes. HMRC's technical note confirms that carried-forward property losses must still be set against future property income. A loss used in 2027/28 or later therefore saves tax at 24%, 44% or 49% rather than 20%, 40% or 45%. They still cannot be set against your salary.
I own my rental property through a limited company. Does the 24% rate affect me?
Not on the company's rental profit, which is charged to Corporation Tax. Interest the company pays you on a director's loan is savings income in your hands, and the savings rates also rise to 24%, 44% and 49% UK-wide from 6 April 2027. Budget 2026 made no further change to dividend tax rates.
Do I pay National Insurance on rental profit from April 2027?
No. HMRC's technical note states that the National Insurance treatment of property income does not change. Rental profit from an ordinary letting business remains outside Class 2 and Class 4 National Insurance.
I rent a room to a lodger. Do the new rates apply?
The Rent a Room scheme is unchanged, so receipts within the £7,500 limit for 2027/28 remain tax-free. If your receipts are higher, the taxable amount is property income and is charged at 24%, 44% or 49% from 6 April 2027.
Will Capital Gains Tax on selling my buy-to-let go up in April 2027?
Budget 2026 did not change Capital Gains Tax on residential property, which stays at 18% within the basic rate band and 24% above it, after the £3,000 annual exempt amount. A sale still needs reporting and payment within 60 days of completion, which is a separate set of rules from the rental income rates.
About the Author
Maz Zaheer, AFA, MAAT, MBA, is the CEO and Chief Accountant of MTA and Total Tax Accountants, two premier UK tax advisory firms. With over 15 years of expertise in UK taxation, Maz provides authoritative guidance to individuals, SMEs, and corporations on complex tax issues. As a Tax Accountant and an accomplished tax writer, he is renowned for breaking down intricate tax concepts into clear, accessible content. His insights equip UK taxpayers with the knowledge and confidence to manage their financial obligations effectively.
Disclaimer:
This article explains the general position for the 2026/27 tax year and is accurate at the date of publication. Tax outcomes depend on individual circumstances, and rules change. It is not advice for your situation. For guidance on your own position, speak to a qualified accountant or tax adviser. My Tax Accountant accepts no liability for action taken solely on the basis of this article.
