New Property Income Tax Rates From April 2027: A Guide for Landlords

Rental profits are about to be taxed at their own rates, separately from wages and trading income, and the new property income tax rates are two percentage points higher than the ones landlords pay today. HMRC expects 2.4 million landlords to pay more by the end of the decade. The change takes effect on 6 April 2027, which sounds distant, and that is exactly why it is worth looking at now while there is still room to do something about it.

What the new property income tax rates are

From 6 April 2027 property income leaves the ordinary income tax bands and gets three rates of its own: a property basic rate of 22%, a property higher rate of 42% and a property additional rate of 47%. That applies in England, Wales and Northern Ireland. Scotland and Wales are being given the power to set their own property rates in line with their existing income tax powers.

The practical effect is simple arithmetic. A landlord in the higher band with £12,000 of rental profit currently pays £4,800 on it. From April 2027 the same profit costs £5,040. On a portfolio producing £40,000 of profit, the difference is £800 a year, every year. Savings income moves to the same three rates on the same date.

The allowance change underneath it

There is a second change in the same measure that is easier to miss and can matter more than the headline rates. From April 2027, general reliefs and allowances are applied to your other income first, and only then to property, savings and dividend income.

For a landlord whose income is mostly rent, that means the personal allowance is used up against employment or self-employment earnings before it reaches the rental profit, so more of the rent sits in the new, higher property bands. If your income mix is unusual, this is the part worth modelling properly rather than estimating.

Dividends have already gone up

Company directors do not have to wait until 2027. The dividend rates rose on 6 April 2026, so they apply to the tax year we are in now: 10.75% ordinary rate, 35.75% upper rate, and 39.35% additional rate, which is unchanged. A director taking £40,000 of dividends in the higher band is paying £800 more this year than on the same dividends last year.

There is a knock on effect for directors’ loans. The section 455 charge is pegged to the dividend upper rate, so loans and benefits to participators made on or after 6 April 2026 carry a 35.75% charge rather than 33.75%. If you have drawn on your loan account since April, it is worth checking where the balance will sit at your year end. Our guide to directors’ loan accounts explains how the charge works and when it comes back.

Five things worth doing before April 2027

1. Get a real figure for your 2026/27 property profit rather than an estimate, so you know which band the new rates will actually hit.
2. Look at who owns the property. A jointly held property, or one held by the spouse with the unused band, can produce a different answer once rental profit has its own rate table.
3. Consider whether a company is the right home for new purchases. We have set out the arithmetic in our post on buy to let in a limited company, including the points that usually decide it against.
4. Review the salary, dividend and pension mix for the rest of this tax year while the 2026/27 dividend rates are known.
5. If a sale is likely, plan the timing early and remember the 60 day reporting rule on residential property, which still catches people out.

What about the Budget on 28 October

The Autumn Budget is on Wednesday 28 October 2026, with the Office for Budget Responsibility publishing its forecast the same day. We do not speculate about what will be in it.

What we do instead is have your numbers ready beforehand. Clients whose position is already mapped out can be told what a Budget announcement means for them within days, with months left to act on it, rather than finding out in the following January when the options have narrowed.

Talk it through

We work with landlords and company directors across Oxfordshire, and if you are looking for accountants in Didcot or anywhere else in the county, the first conversation is the same one: what does your rental profit look like, and what are the sensible options open to you.

Rental income sits on your self assessment tax return, so that is usually where this starts. Where a decision needs proper analysis, our tax advice work is quoted as a clear price range once we have seen the position, and we tell you at the time if anything else comes up. You can see everything we do on our services page.