The short answer
The 28 October 2026 Budget raises income tax on rental profits by a further 2 percentage points from 6 April 2027. Landlords who own property in their own name will pay 24%, 44% or 49%, instead of the 22%, 42% and 47% already set by last year's Budget. That's 4 points more than today's 20%, 40% and 45%.
There was also good news for landlords joining Making Tax Digital in April 2027: no penalty points for late quarterly updates in their first year. Stamp duty, including the 5% surcharge on additional homes, didn't change.
Key facts
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New property income rates from 6 April 2027: 24% basic, 44% higher and 49% additional, in England, Wales and Northern Ireland. The government will legislate in Finance Bill 2026-27. GOV.UK
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On top of last year's rise: Budget 2025 had already set property rates of 22%, 42% and 47% for 2027-28. GOV.UK
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Mortgage interest relief follows the property basic rate: under the rules set last year, the tax credit on mortgage interest is given at the property basic rate from 2027-28. GOV.UK
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Scotland and Wales: both devolved governments can set their own property income rates. GOV.UK
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Making Tax Digital: no late-submission penalty points on quarterly updates in 2027-28 for people joining in April 2027. You still have to send the updates before you can file your return. GOV.UK
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What it raises: £575 million in 2028-29, according to the Budget's own costings. GOV.UK
How much more tax will I pay?
The rise only applies to profit from property you own personally. It starts with the 2027-28 tax year, so the first returns at the new rates are due by 31 January 2029. Your 2026-27 figures use today's rates.
Two examples, both for property held in the landlord's own name.
Priya, a higher-rate taxpayer. Her rent less allowable costs (before mortgage interest) is £20,000 a year, she pays £8,000 of mortgage interest, and her other income means all of that profit is taxed at the higher rate.
- 2026-27, today's rates: £20,000 at 40% is £8,000, less a £1,600 credit (20% of £8,000). Tax: £6,400.
- 2027-28, last year's planned rates: £20,000 at 42% is £8,400, less a £1,760 credit (22%). Tax: £6,640.
- 2027-28, after this Budget: £20,000 at 44% is £8,800, less a £1,920 credit (24%). Tax: £6,880.
That's £480 a year more than today, £240 of it from this Budget.
Tom, a basic-rate taxpayer. His profit before mortgage interest is £12,000, his interest is £4,000, and all of it falls within the basic rate band.
- 2026-27: £12,000 at 20% is £2,400, less an £800 credit. Tax: £1,600.
- 2027-28, after this Budget: £12,000 at 24% is £2,880, less a £960 credit. Tax: £1,920.
That's £320 a year more.
The examples assume the mortgage interest credit stays at the property basic rate, as last year's rules set it, and so rises to 24%. Check the final Finance Bill before planning around the credit.
Does it affect my limited company?
No. These are income tax rates, so properties owned through a limited company pay corporation tax instead and aren't affected. That doesn't make moving property into a company worthwhile on its own: a transfer can bring stamp duty, capital gains tax and new mortgage costs. Get advice from an accountant first.
What changed for Making Tax Digital?
If your qualifying income (rent plus self-employment income before expenses) is over £30,000 on your 2025-26 return, you join Making Tax Digital on 6 April 2027. The Budget says that group won't get penalty points for late quarterly updates during 2027-28.
The updates still matter. You can't submit your end-of-year return until they're sent, and late returns and late payments still bring penalties.
If you joined in April 2026, the announcement doesn't extend your break. HMRC's current rules start penalty points for your late quarterly updates from 6 April 2027. Your next update is due 7 November: see what to send for the 7 November MTD update.
What didn't change?
- Stamp duty: no change to rates or the 5% surcharge on buy-to-let and second homes. Work out a purchase with the buy-to-let stamp duty calculator.
- The £1,000 property allowance: not mentioned. The separate trading allowance rises from £1,000 to £3,000 from April 2027, but that's for trading income, not rent.
- Local Housing Allowance: the Budget didn't announce a change. See the Local Housing Allowance freeze for where rates stand.
Anything else for landlords?
- High Value Council Tax Surcharge: confirmed for residential properties worth £2 million or more, from April 2028.
- Your First Home: a £4.7 billion equity loan scheme to help about 70,000 first-time buyers in England buy new-build homes with a 2.5% deposit. Pre-registration opens by the end of December 2026. Some longer-term tenants may use it to buy.
- Lower capital gains relief for businesses: the Business Asset Disposal Relief lifetime limit falls from £1 million to £500,000 from April 2027. This rarely applies to ordinary lets.
What should landlords do now?
- Know your profit before mortgage interest for 2025-26 and so far in 2026-27. That's the figure the new rates apply to.
- Check your band. Profit that pushes you over the higher rate threshold is taxed at 44% from April 2027.
- Re-check rent cover. Lenders often ask higher-rate taxpayers for more rent cover. Run your numbers through the buy-to-let mortgage calculator before refinancing.
- Check your Making Tax Digital start date. Over £30,000 of qualifying income on your 2025-26 return means 6 April 2027.
- Talk to an accountant before restructuring anything.
If your rent and costs are already in AskPortfoliq, ask it "what was my rental profit for 2025-26?" on WhatsApp, Telegram or the web. It shows your profit before mortgage interest and the interest figure, property by property, ready to work out the new rates. This guide is general information, not tax advice.