Property Income Tax Rates Are Rising

Property Income Tax Rates Are Rising — What Landlords Need to Know Before April 2027

If you receive rental income in your own name, a significant tax change is coming that could noticeably increase your annual bill. Announced in the 2025 Budget and now legislated through the Finance Act 2026, new higher income tax rates specifically for property income will take effect from

6 April 2027.

What Are the New Rates?

From April 2027, a separate set of income tax rates will apply exclusively to property income:

Band	Current Rate	New Rate
Basic rate	20%	22%
Higher rate	40%	42%
Additional rate	45%	47%

That’s a 2 percentage point increase across all bands — a change the Office for Budget Responsibility estimates will raise around £500 million a year in additional tax revenue.

Who Is Affected?

Individual landlords are directly in the firing line. If you own rental property in your own name and pay income tax on those profits, these new rates will apply to you.

Landlords holding property through a limited company are not affected by this particular change. Corporation tax rules apply to companies, so the new property income rates do not apply to them. For anyone already weighing up personal versus company ownership, this is another factor to build into the numbers.

For individual landlords already feeling the impact of higher borrowing costs and earlier tax changes — including the restriction of mortgage interest relief — this further increase may bring forward decisions about whether to keep holding property personally or to restructure.

How Does This Fit Into the Bigger Picture?

This change does not sit in isolation. The government has also announced a High Value Council Tax Surcharge (widely referred to as a “mansion tax”) on properties worth over £2 million, due to be collected from April 2028.

At the same time, Making Tax Digital for Income Tax will bring landlords with gross rental income above £50,000 into quarterly digital reporting from April 2026, with the threshold dropping to £30,000 from April 2027.

Taken together, these measures point in a clear direction: the tax and compliance burden on property investors is increasing. Those who plan ahead will be better placed to manage it.

What Should You Do Now?

There is still time to review your position before April 2027. In practice, that may mean:

• Understanding what the new rates mean for your specific tax bill

• Reviewing whether your current ownership structure remains appropriate

• Exploring whether any changes are worthwhile — and, if so, when to make them

Early, tailored advice is almost always more valuable than last‑minute decisions.

If you would like to discuss how these changes could affect you and what options may be available, you can book a free 15‑minute consultation with The Tax Studio to talk through your position in more detail.