Rental Income Taxes Are Rising in England

Income tax rates for individual landlords in England are planned to rise from 6 April 2027. Even if your rent and expenses stay unchanged, you could keep less after tax. This does not mean every rental payment you receive today will immediately face a higher tax charge.

The rates announced in the 28 October 2026 Budget are 24%, 44% and 49%. Legislation is planned through Finance Bill 2026–27. HMRC’s policy note identifies 2027/28 and subsequent tax years as the intended period of application.

What changed from last year’s announcement?

Separate property income tax rates were already announced in Budget 2025. Those rates were set to be 22%, 42% and 47% from April 2027.

The latest Budget adds another two percentage points:

The total difference compared with today is four percentage points. However, only two points come from the latest announcement. Budget 2026 expressly distinguishes this further increase from last year’s change.

What happens to £10,000 of rental profit?

Suppose you have £10,000 of taxable rental profit after allowable expenses and personal tax allowances. All of it falls within the basic-rate band. Assume there is no mortgage interest, other finance cost or tax credit.

• At today’s 20% rate: £2,000 tax.
• At the previously announced 22% rate: £2,200 tax.
• Under the new 24% plan: £2,400 tax.

That is £400 more than today, or £200 more than the previous plan, on the same profit. It does not mean everyone receiving £10,000 in gross rent will owe £2,400. The example isolates the effect of the rate change.

Rent received is not the same as taxable profit

Your calculation depends on allowable expenses, available allowances, other income and the tax bands your income falls into. If your rental profit crosses a tax-band boundary, applying one rate to all your rental profit gives the wrong answer.

Residential finance costs also have separate rules. HMRC’s rental income guidance explains that personally owned property and property held through a company receive different treatment.

These new rates concern personal property income, not limited company Corporation Tax. For individuals, the announced scope covers England, Wales and Northern Ireland; Scotland requires separate consideration.

What should you review now?

Check your expected annual taxable profit and the money you set aside for tax, alongside your monthly rent. Keep the current rules used for this year’s return separate from the announced changes used to plan next year’s cash flow.

For every Self Assessment client, Leon Advisers prepares a detailed tax schedule showing the relevant year’s tax, any payments on account for the following year and each payment deadline separately. We share it before each tax payment period and remind clients about approaching payments.

To review how the proposed rates could affect your rental income and payment planning, contact us about our accounting service for landlords.

This article provides general information. Your personal tax calculation depends on your income, expenses and the applicable rules.