Landlord Tax Rise April 2027: What the New 24% Property Income Rate Means

From 6 April 2027, individual landlords in England are expected to pay income tax on rental profits at 24%, 44% and 49%, two points above the rates announced at Budget 2025 and four points above today's rates. Budget 2026, delivered on 28 October 2026, also lifts relief for mortgage interest to 24%. The change still needs Finance Bill 2026-27 to become law.

This article is for general information purposes only and does not constitute legal advice. Landlords should seek independent legal advice for their specific circumstances. It describes the position in England.

What are the new property income tax rates from April 2027?

The property basic rate will be 24%, the property higher rate 44% and the property additional rate 49%, taking effect from 6 April 2027. That is the government's stated position in the Budget 2026 overview of tax legislation and rates, which says the legislation will be introduced in Finance Bill 2026-27. Until that Bill is passed, the rates are announced policy rather than enacted law.

The rise comes in two steps. Budget 2025 first created separate rates for property income of 22%, 42% and 47% from 2027 to 2028, as set out in the government's technical note on property, savings and dividend income rates. Budget 2026 then added a further two percentage points to every band before those rates had taken effect.

Property income, meaning profits from letting property, keeps its existing definition. The Budget 2025 technical note states that the Rent a Room Scheme and the property allowance, currently £1,000 a year, are unchanged.

Who does the 2027 landlord tax rise apply to?

The rise applies to individual landlords and to individuals who let property through a partnership. Under the Budget 2025 design, property income received by trusts and by estates of deceased persons is also taxed at the separate property rates. The Budget 2026 policy costings describe the measure as an increase in tax on property income for "unincorporated landlords". Landlords who hold property through a limited company pay corporation tax on profits, which this measure does not change.

The rates apply across England, Wales and Northern Ireland, according to the overview of tax legislation and rates. The same document says the Scottish and Welsh governments have been given the ability to set their own property income rates, so landlords who are Scottish taxpayers are not covered by the figures in this article.

How does the change affect mortgage interest relief?

Mortgage interest relief rises to 24% in 2027 to 2028, but it does not keep pace with the higher and additional rates. Since the restriction on finance costs for individual landlords, mortgage interest is not deducted from rental income. Instead, landlords receive a tax reduction at the basic rate, and the Budget 2026 policy costings state that this relief "will continue to be aligned to the property basic rate".

HMRC's guidance on how the finance cost relief is worked out sets the reduction at the basic rate value of the lowest of three figures: the finance costs not deducted, the property business profits, and adjusted total income. Any finance costs that cannot be relieved because of that cap are carried forward to later years.

The gap between the rate on profit and the rate of relief is what matters. For a higher rate landlord, the gap stays at 20 percentage points (44% against 24%). For an additional rate landlord, it stays at 25 points (49% against 24%).

How much more tax will a landlord pay? Two worked examples

The examples below assume the personal allowance of £12,570 and the higher rate threshold of £50,270, which the government has said will stay frozen until 5 April 2031. Property profit means rent less allowable expenses, before mortgage interest. They are simplified illustrations for an England taxpayer and ignore other income and reliefs.

Example 1: basic rate landlord. Salary of £30,000, property profit of £10,000 and mortgage interest of £4,000. The personal allowance is used against the salary first, so the whole £10,000 of property profit falls in the basic rate band.

The increase is £240 a year.

Example 2: higher rate landlord. Salary of £60,000, property profit of £20,000 and mortgage interest of £8,000. The salary already uses the personal allowance and the basic rate band, so the whole £20,000 of property profit falls in the higher rate band. Total income of £80,000 is below the £100,000 level at which the personal allowance starts to be withdrawn.

The increase is £480 a year. Of that, £240 comes from Budget 2026, because under the Budget 2025 rates the same landlord would have paid £6,640.

Why does it matter that property income is taxed after salary?

The order of taxation decides which band rental profit falls into. The Budget 2025 technical note states that the personal allowance and other reliefs are set first against income that is not property, savings or dividend income. Income is then taxed in this order: other income such as employment and pensions, then property income, then savings, then dividends.

In practice, a landlord with a salary or pension uses up the personal allowance and lower bands on that income first. Rental profit then sits on top, which is why in both examples above every pound of property profit was taxed at the new property rates. Losses carried forward from the property business must still be set against property income.

What else in Budget 2026 affects landlords?

Two other announcements are relevant to most self-managing landlords:

• Making Tax Digital penalty points. Paragraph 6.152 of the Budget 2026 document states that taxpayers joining Making Tax Digital for Income Tax in April 2027 will not receive penalty points for late submission of their first four quarterly updates for the 2027 to 2028 tax year. Landlords with qualifying income above £30,000 in 2025 to 2026 are due to join from 6 April 2027. Our Making Tax Digital guide for landlords explains how qualifying income is measured.
• Savings income. Savings income rates rise by the same two points to 24%, 44% and 49% from 6 April 2027, and those rates apply across the UK.

What should landlords do before April 2027?

1. Work out where your rental profit sits in your tax bands for 2027 to 2028, using your other income first.
2. Re-run your numbers with 24%, 44% or 49% on profit and 24% relief on mortgage interest. The free rental yield and ROI calculator gives a pre-tax starting point.
3. Check whether your qualifying income brings you into Making Tax Digital from April 2027, and choose compatible software early.
4. Make sure every allowable expense is evidenced. Government guidance on working out rental income lists repairs, letting agent fees, insurance and accountant's fees among them.
5. Keep records of rent and expenses for at least five years after the 31 January filing deadline for each tax year, as government guidance requires. Our record retention table sets this alongside the other periods landlords need to know.
6. Take specialist tax advice before restructuring, including any move to a limited company. The Budget 2026 policy costings expect the incorporation response to be limited, and moving property into a company can bring capital gains tax and stamp duty land tax costs.

Keeping the evidence behind your tax return

A higher rate of tax raises the value of every allowable cost a landlord can prove. Gas safety checks, electrical inspections, repairs and agent fees all sit in the records that support a tax return, and the same paperwork often doubles as compliance evidence.

The LLCR platform is designed to hold that record in one place. The Document Vault lets landlords upload and organise certificates and evidence by property, so invoices and certificates for each home can be found again when the tax return, or a council, asks for them. LLCR is free for one property.

Want to check that the certificates behind your rental business are all in date before the new tax year? The free LLCR compliance checker takes a few minutes.