From 6 April 2027, individual landlords in England, Wales and Northern Ireland are due to pay Income Tax on rental profit at 24%, 44% and 49%, instead of 20%, 40% and 45%. Budget 2026, on 28 October 2026, announced those rates, to be set in Finance Bill 2026-27. If you read 22%, 42% and 47% elsewhere, that was the earlier plan: Budget 2025 announced those figures and Finance Act 2026 set them, and Budget 2026 added two more points.
This guide sets out the new rates, what happens to your mortgage interest credit, two worked examples, and who is not affected. The Bill has not passed yet, so treat the figures as announced rather than final.
The rates
| Band | 2026 to 2027 | From 6 April 2027 (as announced) |
|---|---|---|
| Basic rate | 20% | 24% (property basic rate) |
| Higher rate | 40% | 44% (property higher rate) |
| Additional rate | 45% | 49% (property additional rate) |
The rates on income from a job, self-employment and pensions are not part of this change. Only property income, and savings income at the same percentages, gets the new rates.
What happens to Section 24
Individual landlords cannot deduct mortgage interest from rental profit. You get a tax reduction instead, 20% of the interest today. The government's technical note says that from 2027 to 2028 the relief is calculated at the property basic rate. With the property basic rate at 24%, the credit would be 24%. So higher rate landlords still get a credit 20 points below the rate they pay on the rent. See Section 24 explained, or try the Section 24 calculator, which uses 2026 to 2027 rates.
Two worked examples
These compare the same year's rent at today's rates and the announced rates. They look only at the tax on the rental profit and leave out your other income, which decides your band.
| Example | 2026 to 2027 | From April 2027 | Difference |
|---|---|---|---|
| Basic rate landlord: £10,000 rental profit, all in the basic band, £3,000 mortgage interest | £2,000 tax, less £600 credit = £1,400 | £2,400 tax, less £720 credit = £1,680 | £280 more |
| Higher rate landlord: £20,000 rental profit, all in the higher band, £8,000 mortgage interest | £8,000 tax, less £1,600 credit = £6,400 | £8,800 tax, less £1,920 credit = £6,880 | £480 more |
Rental profit here is before mortgage interest, because that is how Section 24 works. The credit cannot create a refund, and other limits can apply. If you want an estimate for this tax year, use the rental income tax calculator.
Your other income now matters more
The change also alters the order in which income is taxed. Property income is taxed after employment, trading and other income, and before savings and dividends. Your personal allowance and other reliefs must be set against income that is not property, savings or dividends first. So if you have a salary or trading income, your rent sits on top of it, and the personal allowance is used up on the salary first.
What does not change
- The property allowance and the Rent a Room Scheme stay the same.
- Carried forward property losses must still be set against property income.
- The personal allowance and the rate bands stay the same, with no new bands for property income.
- National Insurance on property income does not change.
- Making Tax Digital is not changed by the new rates: the technical note says so directly. See what changes for landlords in April 2027 for the £30,000 threshold, which starts on the same day.
Who is not affected, or may differ
Companies. The rates are for individuals, partners, trusts and estates. A limited company's rental profit stays in Corporation Tax. That does not mean you should move into a company: a transfer is usually treated as a sale, and dividends you take out are taxed. Read about limited company buy to let and get advice before you restructure.
Scotland and Wales. GOV.UK says the rates apply in England, Wales and Northern Ireland, and that the governments of Scotland and Wales have the ability to set property income rates under their Income Tax powers. Scottish and Welsh landlords should check what their own governments announce.
Non-resident landlords. The technical note says the withholding rate under the Non-Resident Landlord Scheme will be the property basic rate. Check with your adviser.
What to do now
- Work out which band your rent falls in, once your other income is taken first.
- Rerun your numbers with the new rates and a 24% credit, and check your cash flow for the 31 January 2029 bill and payments on account.
- Keep tidy records of allowable expenses. Every expense you claim saves more tax at the higher rates.
- Watch Finance Bill 2026-27 and any change to these figures before they take effect. We will update this page if they change.
VoxaMTD sends your MTD quarterly updates from your rent and expense records. There is a free plan for up to two tenancies. We make VoxaMTD. Start free, no card needed.
The rates were one of several changes on the day: Budget 2026 for landlords covers the rest, and MTD for landlords in April 2027 covers the reporting that starts at the same time. There are more guides on our landlord guides page.
Sources
- Income Tax: changes to tax rates for property and savings income (Budget 2026) (GOV.UK), read on 3 November 2026.
- Budget 2026: overview of tax legislation and rates (GOV.UK), read on 3 November 2026.
- Change to tax rates for property, savings and dividend income: technical note (Budget 2025) (GOV.UK), read on 3 November 2026.
- Finance Act 2026, section 7 (legislation.gov.uk), read on 3 November 2026.
This guide is general information, not tax advice.