The property income tax rates April 2027 will increase the tax paid by individuals receiving rental income directly. From 6 April 2027, rental profits will be taxed at 24%, 44% or 49%, depending on the applicable income tax band.
That is four percentage points above the current 20%, 40% and 45% rates. The change could materially increase tax bills for landlords who hold property personally, making it important to review rental profits, cash flow and ownership structures before the new tax year begins.
The following table compares the current rates with those scheduled to apply from 6 April 2027.
The new property rates apply to taxable property income for 2027/28 and subsequent tax years, subject to the applicable rules and any devolved arrangements. Employment income, pension income and trading profits remain subject to their respective income tax rates.
Property income generally includes taxable profits from letting land or buildings in the UK or overseas where the income falls within UK income tax rules.
The changes are relevant to individuals receiving taxable rental profits. This includes landlords who own buy-to-let properties personally and individuals receiving profits from property partnerships.
Limited companies are treated differently. A company letting property generally pays corporation tax on its taxable profits. The new individual property income tax rates therefore do not apply directly to those company profits.
Because each property rate rises by four percentage points, the additional cost is straightforward where rental profit remains within one tax band.
Assume the entire £28,000 falls within the basic-rate property band.
Tax at 20% today:
£28,000 × 20% = £5,600
Tax at 24% from April 2027:
£28,000 × 24% = £6,720
Additional tax:
£1,120 a year
Assume the entire £60,000 falls within the higher-rate property band.
Tax at 40% today:
£60,000 × 40% = £24,000
Tax at 44% from April 2027:
£60,000 × 44% = £26,400
£2,400 a year
Both examples assume the rental profit is taxed at a single rate throughout. They also assume the landlord’s other income and reliefs remain unchanged.
Where taxable rental profit spans more than one band, each portion is taxed at the relevant rate. The four-percentage-point increase still applies to each affected slice.
The measure applies to individuals who receive rental income directly.
This can include:
The property income tax UK changes may have a greater impact on landlords whose rental profits fall within higher or additional-rate bands.
Landlords who own property through a limited company do not pay these individual property income tax rates on the company’s rental profits.
The company generally pays corporation tax instead.
That distinction may become more important as the gap between personal and company tax treatment changes.
However, incorporation is not automatically the better option.
Whether a company structure suits a particular landlord depends on factors such as:
The figures should therefore be modelled before any ownership structure is changed.
Since April 2020, individual residential landlords generally cannot deduct mortgage interest as an ordinary business expense when calculating taxable property profit.
Instead, eligible finance costs are added back and relief is provided through a tax credit.
The current credit is calculated at 20% of the lower of:
The credit is currently set at 20%.
Whether that 20% rate will increase alongside the new property basic rate from April 2027 has not yet been confirmed in published HMRC guidance.
For that reason, landlords should not assume a new finance-cost credit rate when preparing forecasts.
This point may be particularly important for landlords with large interest-only mortgages or high borrowing costs.
The higher rates may be particularly significant for landlords who:
The higher rates mean landlords should focus on the amount of taxable rental profit rather than gross rent alone.
Accurate forecasting can help establish how much cash should be reserved for future tax liabilities.
Landlords can use the period before the new rates begin to review their position.
Review rent received and allowable expenses.
These may include eligible repairs, insurance, letting-agent fees and other qualifying property running costs.
Accurate figures help establish taxable profit for each property and the portfolio as a whole.
Prepare a forecast covering employment income, pension income, trading profits and rental profits.
This can help establish whether rental profits are likely to fall within the basic, higher or additional property rate.
Model future tax liabilities using the new 24%, 44% and 49% property rates.
Do not assume that the residential finance-cost credit will move from its current 20% rate until official guidance confirms the position.
Consider whether the higher tax bill affects cash available for:
Property losses carried forward can reduce future taxable property income under the normal rules.
Keep clear records of previous losses and confirm how much remains available.
Some landlords may consider transferring properties into a limited company or changing joint ownership arrangements.
These decisions can create significant tax and commercial consequences.
Potential costs can include Capital Gains Tax, Stamp Duty Land Tax, mortgage changes, legal expenses and ongoing company compliance.
Our guidance on capital gains tax for landlords explains relevant considerations around property disposals.
Landlords considering a sale or restructuring can also review our capital gains tax services for further support.
Retain:
Good records support accurate tax returns and make future tax forecasting easier. This is particularly important as HMRC’s landlord tax crackdown increases scrutiny of undeclared rental income and incomplete property records.
Four steps are worth considering before the new rates begin.
The new property income tax rates make accurate forecasting more important for landlords with multiple properties or several income sources.
A tax adviser can review rental profits, other income, available reliefs, carried-forward losses and ownership options before major financial decisions are made.
Professional advice can also help landlords assess the tax implications of refinancing, selling property or changing ownership structures.
Apex Accountants supports landlords with personal tax planning, rental income reporting and related compliance requirements.
Explore our personal tax services to discuss your circumstances before the April 2027 changes.
Apex Accountants advises landlords, property companies and owner-managed businesses on rental income tax, incorporation, Capital Gains Tax and HMRC compliance.
Our wider tax services can support landlords with ongoing tax planning, reporting and compliance alongside property-specific advice.
We can model the April 2027 rates against your actual property portfolio and show the difference in pounds.
Our team can also review:
This gives you a clearer view of the financial impact before the new rates take effect.
From 6 April 2027, individuals receiving rental income directly will face property income tax rates of 24%, 44% and 49%. That represents a four-percentage-point increase compared with today’s 20%, 40% and 45% rates. For a landlord with £28,000 of taxable rental profit falling entirely within the basic-rate band, the change means an additional £1,120 a year. For £60,000 of taxable rental profit falling entirely within the higher-rate band, the increase is £2,400 a year.
Landlords should review rental profits, cash flow, borrowing and ownership structures before April 2027 rather than waiting for the new rates to take effect. The future treatment of the residential finance-cost credit should also be monitored. No new rate should be assumed until official guidance confirms the position.
The new rates apply from 6 April 2027. Individuals receiving rental income directly will pay 24%, 44% or 49% on taxable property income, depending on the applicable tax band.
The rates increase by four percentage points compared with today’s rates. Each £10,000 of taxable rental profit therefore costs £400 more where the profit remains within the same tax band.
If the full £28,000 is taxed at the basic property rate, the tax rises from £5,600 at 20% to £6,720 at 24%. That is an increase of £1,120 a year.
If the full £60,000 is taxed at the higher property rate, the liability rises from £24,000 at 40% to £26,400 at 44%. That is an additional £2,400 a year.
No. The measure applies to individuals receiving property income directly. Limited companies generally continue to pay Corporation Tax on taxable rental profits.
That has not been confirmed in published HMRC guidance. The current residential finance-cost tax credit is 20%, so landlords should not assume a higher rate for 2027 until official guidance confirms the position.
Not automatically. Incorporation can create Capital Gains Tax, Stamp Duty Land Tax, refinancing and legal consequences. The personal and company positions should be modelled before changing ownership.
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