April 2027: Every Landlord's Tax Rate Is Going Up. Here Is What You Need to Know.
RealYield Team
Property Analyst
From 6 April 2027, every individual landlord in England, Wales and Northern Ireland will pay income tax on their rental profits at rates two percentage points higher than today.
This is not a proposal or a consultation. The Finance Act 2026 received Royal Assent on 18 March 2026. The rates are fixed: 22% basic, 42% higher, 47% additional. If you hold buy-to-let property personally and pay the higher rate, your income tax bill on rental profits will rise.
What Is Changing
Before April 2027, rental profits are taxed at the same rates as employment and trading income. If you are a higher-rate taxpayer, rent and salary sit in the same tax calculation at 40%.
From 6 April 2027, property income has its own separate rates:
| Tax band | Rate before April 2027 | Rate from April 2027 |
|---|---|---|
| Basic | 20% | 22% |
| Higher | 40% | 42% |
| Additional | 45% | 47% |
These are the first separate property income tax rates in UK tax history. Prior to this, rental profits sat in the standard income tax calculation alongside employment and trading income. From April 2027, property income is calculated separately, after employment and trading income but before savings and dividend income.
The change was announced by Chancellor Rachel Reeves at the Budget on 26 November 2025 and is now law.
Source: GOV.UK, income-tax-changes-to-tax-rates-for-property-savings-and-dividend-income; Finance Act 2026 [verified June 2026]
Why the Government Is Doing This
The stated rationale, as set out on GOV.UK, is the National Insurance gap.
Employees pay National Insurance on wages. The self-employed pay NI on trading profits. Landlords pay no National Insurance on rental income. Adding two percentage points to each property income tax band is the government's mechanism for narrowing the effective tax difference between earned income and rental income.
The Office for Budget Responsibility estimated that the combined changes to property, savings, and dividend income rates will raise over £2.3 billion annually by 2030-31.
Frequently Asked Questions
What are the new property income tax rates from April 2027?
From 6 April 2027, property income is taxed at 22% (basic rate), 42% (higher rate), and 47% (additional rate). Each rate is two percentage points above the equivalent standard income tax rate. The change applies to individual landlords in England, Wales and Northern Ireland. Scotland sets its own rates separately via the Scottish Budget.
Does the April 2027 change affect limited company landlords?
No. The new property income tax rates apply only to individual landlords holding property in their own name. Limited companies continue to pay corporation tax at existing rates: 19% on profits up to £50,000 and 25% on profits above £250,000, with marginal relief between those thresholds. Finance costs remain fully deductible for companies as normal business expenses.
How does the April 2027 rate change interact with Section 24?
The Section 24 finance cost credit also rises from 20% to 22% from April 2027, in line with the new property basic rate. For basic-rate taxpayers, this broadly maintains the current position. For higher-rate taxpayers, the rate rises from 40% to 42% but the credit only rises from 20% to 22%, so the 20 percentage point gap between rate and credit remains unchanged. The absolute tax cost increases because 42% is applied to the same gross taxable income figure before the credit.
Does the personal allowance change from April 2027?
No. The personal allowance remains at £12,570 and the higher rate threshold remains at £50,270. Both are frozen until at least 5 April 2031. What does change is the ordering rule: from April 2027, HMRC applies the personal allowance against employment, trading or pension income first. For landlords whose earned income is below £12,570, more rental income therefore falls outside the allowance and is taxed at the new property rate.
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