Tax on rental profits will rise to 24% for basic-rate landlords from 6 April 2027, the second increase in eleven months, according to Key Business Consultants.
Property income rates in England, Wales and Northern Ireland will go to 24%, 44% and 49% for basic, higher and additional-rate taxpayers. Budget 2025 had already set separate property rates of 22%, 42% and 47% from the same date. Chancellor John Healey added a further two points at the Budget on 28 October.
HMRC’s impact note estimates that about 2.4 million landlords, around 5% of taxpayers, will face a change in tax by 2031-32. HMRC puts the average increase for affected taxpayers at £225 a year in 2027-28. The measure is forecast to raise £575 million in 2028-29, settling at about £455 million a year by 2031-32.
Relief for mortgage interest will also rise to 24%, as finance cost relief remains tied to the property basic rate.
The Office for Budget Responsibility said it is more likely than not that the rise will push rents up over time. It rated the costing as highly uncertain, as landlords may sell up or move property into companies.
“Landlords have had two rate rises in eleven months,” said Gary Green, FCA, director at Key Business Consultants. “A basic-rate landlord will pay a fifth more tax on the same rent from April 2027, and mortgage interest relief only claws back part of it.”
Key’s own illustrative figures, which assume all profit falls in one tax band, show a basic-rate landlord with £12,000 of profit and no mortgage paying £2,880 in 2027-28 against £2,400 now, an increase of £480.
The 2025-26 Self Assessment return, due by 31 January 2027, is the last before the new rates apply. It also determines who joins Making Tax Digital in April 2027, with landlords and sole traders with qualifying income above £30,000 in 2025-26 brought into quarterly digital reporting.
“Don’t rush to move properties into a company because of a headline rate,” Green said. “Stamp duty, capital gains tax and mortgage costs can wipe out the savings. Run the numbers on your own portfolio first.”
