Property income tax rises in April 2027.

Property income rates from 6 April 2027 · England and Northern Ireland	Rate
Basic rate, up from 20%	22%
Higher rate, up from 40%	42%
Additional rate, up from 45%	47%

What changes

In the 2026 to 2027 tax year, if you live in England or Northern Ireland, rental profit is taxed at the same rates as wages: 20%, 40% and 45%. From the 2027 to 2028 tax year, which starts on 6 April 2027, property income has its own rates. Section 7 of the Finance Act 2026 sets them at 22%, 42% and 47%.

The bands don't move. The personal allowance stays at £12,570 and the basic rate band at £37,700 of taxable income. The same Act keeps both frozen up to and including the 2030 to 2031 tax year.

Property income means the profit from letting property in the UK or abroad, plus a few smaller items. HMRC says it also covers property income distributions from real estate investment trusts and property funds. The £1,000 property allowance and the Rent a Room scheme don't change.

Savings income moves to 22%, 42% and 47% on the same date.

Who pays the new rates

The rates apply to individuals who let property in their own name, alone or jointly. Trustees pay new property rates too: 47% for accumulation or discretionary trusts and 22% for other trusts. The government's policy paper of 26 November 2025 says more than 90% of UK taxpayers have no taxable property income.

Holiday lets. The furnished holiday lettings regime ended on 6 April 2025 for income tax. Profit from a holiday let is now part of your property business, so the new rates apply to it too. Our guide to holiday let tax after the FHL rules covers what else changed.

Landlords who live abroad. If you aren't UK resident, you can't be a Scottish or Welsh taxpayer, so the rates in the table apply to your UK rental profit. HMRC's technical note says the Non-Resident Landlord Scheme will deduct tax at 22%, not 20%. Our article on UK property tax for overseas investors explains the scheme.

Companies are not affected

These are income tax rates. A company pays Corporation Tax on its rental profit instead. GOV.UK's rates, checked on 5 October 2026, are 19% on profits of £50,000 or less and 25% on profits over £250,000. Marginal relief may apply in between.

Money you take out of a company as dividends is taxed separately. On 6 April 2026 the dividend ordinary rate rose from 8.75% to 10.75% and the upper rate from 33.75% to 35.75%. Whether a company suits you depends on far more than the rate, and your accountant advises on that.

Wales and Scotland set their own

Which rates you pay depends on where you live, not where the property is. Senedd Research puts it plainly: if you live in Wales and own property in England, you pay the Welsh rate on that income.

Wales. Section 8 and Schedule 2 of the Finance Act 2026 let the Senedd set property rates for Welsh taxpayers from 2027 to 2028. It sets the rates, not the bands. As of 5 October 2026 the Senedd hasn't set the rates. The Welsh Government plans to publish its draft budget for 2027 to 2028 on 17 November 2026 and its final budget on 16 February 2027.

Scotland. Scottish taxpayers already pay income tax at rates the Scottish Parliament sets. The same Act lets the Scottish Parliament set separate rates for property income. The Scottish Budget for 2027 to 2028 is due on 3 December 2026.

Mortgage interest and your personal allowance

If you let a home in your own name, mortgage interest isn't deducted from your rental profit. You get a tax reduction instead, worked out at the basic rate. From 2027 to 2028 it's worked out at 22%, the property basic rate.

The order your income is taxed in also changes. From April 2027, your personal allowance and other reliefs are used against wages, trading profits and pensions first. Property income is taxed next, then savings, then dividends.

Two worked examples

Both examples are for a landlord who lives in England, with figures kept simple to show the effect of the rates. Other income, allowances and reliefs can change a real bill.

A basic rate taxpayer. You earn a £30,000 salary and make £10,000 of rental profit, with no mortgage. All of it falls in the basic rate band. Tax on the rent is £2,000 in 2026 to 2027 and £2,200 in 2027 to 2028, which is £200 more a year.

A higher rate taxpayer. You earn £60,000 and make £20,000 of rental profit before mortgage interest. The interest is £8,000.

Worked example · £20,000 rental profit, £8,000 mortgage interest	Tax
2026 to 2027: 40%, less 20% of the interest	£6,400
2027 to 2028: 42%, less 22% of the interest	£6,640

That's £240 more a year. In both cases the rise works out at 2% of the profit left after mortgage interest.

Running the numbers

Our investor calculator shows estimates before tax, so you can apply the rate that fits your situation. If you'd rather have your home run for you, our management package offers a guaranteed rent every month, or full management for a fee. Your accountant confirms what the new rates mean for your own tax.