Landlords: Your Rental Income Gets Its Own Tax Rates From April 2027

If you let property in your own name, your tax bill is about to change in a way that's easy to miss — and April 2027 is closer than it feels. From 6 April 2027, rental profit gets its own Income Tax rates, separate from salary or trading income. At the same time, quarterly digital reporting lands for hundreds of thousands of landlords. Either change on its own would mean more admin; together, they mean you need your rental records in proper shape well before the new tax year starts.

Landlord property income tax rates from April 2027

Right now, your rental profit is taxed at the same rates as your other income: 20% at the basic rate, 40% at the higher rate and 45% at the additional rate. From 6 April 2027, property income in England, Wales and Northern Ireland gets its own rates, two points higher at every band:

• Basic rate: 22% (up from 20%)
• Higher rate: 42% (up from 40%)
• Additional rate: 47% (up from 45%)

Scotland sets its own Income Tax rates, so Scottish landlords should watch for separate announcements. For everyone else, the new rates are already legislated — this isn't a rumour to wait out, and the Autumn Budget on 28 October 2026 could add further detail rather than reverse it.

What does two points actually mean in pounds? Take a higher-rate landlord with £10,000 of taxable rental profit. At 40% that's £4,000 of tax; at 42% it's £4,200 — £200 more on that slice alone, before the allowance change below. Across several properties, it adds up fast.

The allowance shuffle could cost you more than the rate rise

The headline rate rise is only half the story. From April 2027, the way allowances and reliefs are applied changes too: they are set against your other income first — your salary, pension or trading income — and only what's left over reduces the tax on your rental income. If you have a salary that already uses up your Personal Allowance, more of your rent will be taxed at the new property rates of 22%, 42% or 47% than before.

Finance costs are affected too: mortgage interest on a residential let held personally gives a tax credit at the property basic rate of 22% from April 2027, so higher-rate landlords get less relief against the higher tax charged.

The practical point is simple: you can't work out your April 2027 bill by just adding 2% to last year's. You need the full calculation — all your income sources together, in the new order — and that's a job to do before the tax year starts, not when your Self Assessment is due the following January.

The second change landing the same month: Making Tax Digital

April 2027 is also when Making Tax Digital for Income Tax expands to landlords and sole traders with qualifying income over £30,000. HMRC estimates around 1.1 million more people will need to comply, including roughly 279,000 landlords in the £30,000–£50,000 band.

Watch out: the £30,000 test uses gross income, not profit

This catches people out. Qualifying income is your gross property and self-employment income before expenses — total rent coming in, not what's left after repairs, agent fees and mortgage interest. A landlord collecting £2,600 a month in rent is already over the threshold even if repairs and fees eat most of it. If you have more than one income source, add them together and check the total.

Once you're in MTD, you'll need MTD-compatible software, digital records kept through the year, and quarterly updates to HMRC — no more shoebox of receipts handed over at year end.

What to do before April 2027

You don't need to do everything this week. But the landlords who will struggle most in 2027 are the ones who leave it all until the new tax year. Work through this list in order:

1. Work out your qualifying income. Add up your gross rent for the last twelve months, plus any self-employment income. If the total is over £30,000, MTD applies to you from April 2027.
2. Get your records digital. Move rent, expenses and repairs into one bookkeeping system or app, and keep invoices and receipts as you go. Quarterly updates are painless when the records are already there; they're miserable when they aren't.
3. Run the new-rates calculation. Estimate your 2027/28 bill at 22%, 42% or 47%, with allowances applied to your other income first. If the number surprises you, you have months to adjust — set money aside monthly, review the timing of repairs, or talk through ownership arrangements with your accountant before April.
4. Check your payments on account. A bigger bill means bigger payments on account the following year. Put a monthly amount aside now so January 2028 doesn't arrive as a shock.
5. Talk to your accountant after the Budget. The Autumn Budget on 28 October 2026 may add new measures for landlords. A quick review after the speech beats discovering them in your tax return.

What not to do

Don't assume your letting agent's statements are your tax records. They're a useful cross-check, but HMRC expects your own complete records, and your agent won't file your quarterly updates for you. Don't mix rental money with personal spending in one account either — untangling a year's mixed transactions is exactly the job that turns a routine return into an expensive one. And don't wait until January 2028 to find out MTD applies to you: by then you'll owe quarterly updates for a year you haven't recorded digitally.

If your rental records need sorting before April 2027, or you want someone to run the new-rates calculation for your properties, take a look at our bookkeeping services or get in touch — the earlier we start, the less there is to untangle. For the official detail, see the government's announcement on separate tax rates for property income from April 2027, and the NRLA's guide to the new landlord tax rules.