Budget 2026: tax on rental profits rises to 24%, 44% and 49% from April 2027
Yesterday's Budget adds another two percentage points to the new property income tax rates. From 6 April 2027, landlords will pay 24%, 44% or 49% on rental profits, and mortgage interest relief moves to 24%.
Landlords who own property in their own name will pay more income tax on their rental profits from 6 April 2027. The Chancellor's Budget on 28 October 2026 raised the planned property income rates by a further two percentage points.
What changed
Last year's Budget had already created separate income tax rates for property income, set two points above the main rates. This Budget adds two more points. The government's rates table for 2027 to 2028 now shows:
| Band | Property income rate from 6 April 2027 |
|---|---|
| Basic rate | 24% |
| Higher rate | 44% |
| Additional rate | 49% |
For the current tax year, 2026 to 2027, rental profits are still taxed at the normal income tax rates. The new rates start with the 2027 to 2028 tax year.
Tax relief on mortgage interest and other finance costs stays tied to the property basic rate, so it rises to 24%, according to Tax Policy Associates. That softens the change a little for basic-rate landlords with mortgages, but higher and additional-rate landlords still get relief at only the basic rate.
The new rates will be legislated for in the Finance Bill 2026-27, so the details could still change as it goes through Parliament.
Who it affects
Individual landlords in England, Wales and Northern Ireland who pay income tax on rental profits. These are income tax rates, so they don't apply to profits made inside a limited company.
As a rough example, a basic-rate landlord with £10,000 of taxable rental profit would pay £2,400 on it in 2027 to 2028, compared with £2,000 at today's 20% rate.
The Office for Budget Responsibility said it is "more likely than not" that this and other recent changes will push rents up over time.
What to do
- Work out your taxable rental profit for this year and estimate the tax at the new rates for 2027 to 2028, so the higher bill doesn't come as a surprise.
- If you have a mortgage, remember the interest relief is given at 24% whatever your band, so higher-rate landlords with large mortgages will feel the rise most.
- Don't rush to move properties into a company to avoid the rise. Transferring has its own tax costs, so get advice from a qualified tax adviser first.
- Making Tax Digital is reaching more landlords from April 2027 too. Check whether you're in scope and that your record-keeping software is ready.
General information, not legal advice. LandlordsReady is independent and not part of the government.