Contents
What is changing
The Budget on 28 October 2026 set separate income tax rates for property income from 6 April 2027. According to HM Treasury's Budget 2026 rates annex:
- 2026/27: rental profit is taxed at the main rates, 20%, 40% and 45%.
- 2027/28: rental profit is taxed at the new property rates, 24%, 44% and 49%.
The bands do not change: a personal allowance of £12,570, cut by £1 for every £2 of income over £100,000; basic rate on the first £37,700 of taxable income; additional rate above £125,140. Some articles and calculators still quote 22%, 42% and 47%, the rates announced a year earlier. Those are out of date.
This applies in England and Northern Ireland. Wales sets its property rates on 17 November 2026 and Scotland on 3 December 2026.
How rental profit is taxed
Three rules decide the bill, as set out in ICAEW's guide to the 2027/28 changes:
- Rent sits on top. Your other income (salary, pension, self-employment) uses the personal allowance and the lower bands first. Rental profit is taxed after it.
- Mortgage interest is not deducted. You get a tax credit on it instead, at the basic rate for property income. That is 20% today.
- The credit rate for 2027/28 is not confirmed. On ICAEW's reading it follows the new property basic rate to 24%, but HMRC has not restated it since the Budget. The examples below assume 24%.
Work out your own figure: UK Landlord Tax 2027 Calculator
Enter your other income, rental profit and mortgage interest to compare 2026/27 with 2027/28. Free, and nothing you enter leaves your browser.
Three worked examples
"Tax on rental profit" is the extra income tax you pay because of the rent, after the mortgage interest credit.
| Landlord | 2026/27 | 2027/28 | Rise a year |
|---|---|---|---|
| Basic rate: £25,000 salary, £10,000 rental profit, £4,000 mortgage interest | £1,200 | £1,440 | £240 |
| Higher rate: £50,000 salary, £20,000 rental profit, £8,000 mortgage interest | £6,346 | £6,826 | £480 |
| Over £100,000: £90,000 salary, £30,000 rental profit, £10,000 mortgage interest | £14,000 | £14,800 | £800 |
The third landlord's tax looks high because the rent takes total income to £120,000, which cuts the personal allowance by £10,000. That lost allowance costs £4,000 a year in both years; it is part of what the rent costs, not part of the rise.
The 4% rule of thumb
Every property rate goes up by 4 points. If the mortgage interest credit also goes up by 4 points, to 24%, the two partly cancel, and the rise is about:
That gives £240, £480 and £800 for the three landlords above. If HMRC keeps the credit at 20%, the rise is 4% of the whole rental profit instead: £400, £800 and £1,200. The rule breaks down when part of your rent falls within your personal allowance or there is too little tax to set the whole credit against, which is why the calculator works it through in full.
What is not decided yet
- The 2027/28 mortgage interest credit rate. 24% is the professional bodies' reading, not an HMRC figure. The calculator lets you change it.
- Scotland and Wales. Their property rates are set on 3 December and 17 November 2026.
- The Finance Bill. Budget rates become law through it and can change on the way.
Questions people ask
What are the landlord tax rates from April 2027?
Property income is taxed at 24% (basic), 44% (higher) and 49% (additional) from 6 April 2027 in England and Northern Ireland, set at the Budget on 28 October 2026. In 2026/27 it is taxed at the main rates of 20%, 40% and 45%.
How much more tax will I pay on rental income in 2027/28?
For most landlords about 4% of rental profit after mortgage interest, if the mortgage interest credit rises to 24%. If the credit stays at 20%, it is about 4% of the whole rental profit.
What is the mortgage interest relief rate for landlords in 2027/28?
It is not confirmed. Relief is given as a credit at the basic rate for property income, which suggests 24%, but HMRC has not restated it since Budget 2026. It is 20% in 2026/27.
Do the new rates apply in Scotland and Wales?
Not automatically. Wales sets its property income rates on 17 November 2026 and Scotland on 3 December 2026.
Why is rental income taxed after my salary?
Under the 2027/28 rules, other income such as salary or pension uses the personal allowance and lower bands first, and property income is taxed on top of it. So rent is usually taxed at your highest rate.