The Chancellor delivered Budget 2026 on 28 October 2026. For landlords the central announcement is a rate change: property income tax rises to 24%, 44% and 49% on 6 April 2027. This post sets out what was announced, what was confirmed, and what was left open, with every figure taken from the government's own documents.

Updated 30 October 2026

The key facts

  • 24%, 44% and 49%. The property basic, higher and additional rates from 6 April 2027, four percentage points above the rates in force today. HMRC policy paper, 29 October 2026.
  • 2.4 million landlords affected. HMRC expects 5% of taxpayers to pay an average of £225 a year more in 2027 to 2028. HMRC policy paper, 29 October 2026.
  • Mortgage interest relief tracks the rise. HM Treasury confirmed finance cost relief "will continue to be aligned to the property basic rate", so the credit moves to 24%. Budget 2026 Policy Costings, page 74.
  • Nothing changed on stamp duty, capital gains tax or dividends. No rate on any of the three was altered for landlords. Budget 2026 Overview of Tax Legislation and Rates.
  • Making Tax Digital still starts in April 2027 at £30,000 of gross rent, with no late submission penalty points on quarterly updates in 2027 to 2028. Budget 2026 OOTLAR, paragraph 2.36.

In this article:

  1. What are the new property income tax rates?
  2. Why is the rise four percentage points and not two?
  3. What does the rise cost on an average rented property?
  4. Did mortgage interest relief change?
  5. Does moving to a limited company fix it?
  6. What is happening with Making Tax Digital?
  7. What is the new rental data reporting consultation?
  8. What else in the Budget affects landlords?
  9. What should landlords do now?

What are the new property income tax rates?

24%, 44% and 49%, from 6 April 2027. HMRC's policy paper Income Tax: changes to tax rates for property and savings income, published 29 October 2026, sets the property basic rate at 24%, the property higher rate at 44%, and the property additional rate and property trust rate at 49%.

Those rates apply to individuals in England, Wales and Northern Ireland. The Scottish and Welsh governments have been given the ability to set property income rates under their existing Income Tax powers, so a Scottish or Welsh landlord may end up on a different figure. The legislation goes into Finance Bill 2026-27, and the rates take effect for the 2027 to 2028 tax year.

Savings income moves to 24%, 44% and 49% on 6 April 2027 as well, and those rates apply across the whole of the UK. Rates on earnings were left alone, as were dividend rates, which were last changed at the November 2025 Budget.

Why is the rise four percentage points and not two?

Because two consecutive Budgets each added two points to property income tax, both taking effect on 6 April 2027. Budget 2026 states it plainly: "Budget 2025 increased the rates of tax on savings and property income by two percentage points across all tax bands from April 2027. The government will increase these rates by a further two percentage points from that date."

Neither increase has taken effect yet. A landlord paying 20%, 40% or 45% on rental profit today moves to 24%, 44% or 49% in one step on 6 April 2027, and sees no change at all before then. The two announcements are easy to read as one rise of two points rather than two separate rises, so it is worth being clear that the full step is four.

The Budget also notes that 84% of income tax payers will be unaffected by the change, and that around half of the revenue is expected to come from the top 10% of households.

What does the rise cost on an average rented property?

Between £446 and £755 a year on a property owned outright, and between nothing and £70 a year on one carrying a 75% mortgage. Those are our figures, modelled on the same two properties we use in our Landlord Economics report: a London flat at £542,000 letting for £26,244 a year, and a property outside London at £251,000 letting for £14,892, both managed by a high-street agent.

HMRC's own estimate is lower, at an average rise of £225 a year in 2027 to 2028 across the 5% of taxpayers affected. The two numbers measure different things and both are right. HMRC is averaging across 2.4 million landlords, including people with a part share in one property, a few months of letting, or profits small enough that the rise barely registers. We are modelling a full year on a single average rented property.

Two further figures from the HMRC paper are worth knowing. The measure raises £35 million in 2027 to 2028, then £575 million in 2028 to 2029 once a full year is collected. And landlords aged 55 or above make up 63% of the affected population, against 39% of UK adults, the clearest official statement so far of who this Budget asks to pay.

Did mortgage interest relief change?

No, and our reading is that this detail matters more to most landlords than the rate rise does. HM Treasury's Budget 2026 Policy Costings states at page 74 that "Finance cost relief will continue to be aligned to the property basic rate". The property basic rate becomes 24% on 6 April 2027, so the Section 24 credit for mortgage interest rises from 20% to 24% on the same day.

For a basic-rate landlord that makes Section 24 cost nothing from April 2027. The credit is given at exactly the rate the landlord pays, so the tax charged on mortgage interest and the credit given against it cancel out. The restriction introduced in 2017 stops biting for that group entirely, and none of the Budget documents spell that out.

There is a second consequence, and it runs the other way to the headline. Where mortgage interest is larger than the operating profit the tax is charged on, four extra points of credit are worth more than four extra points of tax. On our London property at 75% loan to value, a higher-rate landlord comes out £58 a year better off after April 2027 than before it. We would not stretch that into a general rule: it is arithmetic on one modelled property, and it holds only while interest exceeds profit. It does show that the rise does not land evenly.

Does moving to a limited company fix it?

For a property you are buying now, a company helps. For one you already own, it almost never does. HM Treasury appears to agree: the Policy Costings say the estimate "accounts for a behavioural response whereby some landlords may choose to incorporate their property business to avoid the increased property income taxation, though this response is expected to be limited".

On our modelling, a higher-rate landlord buying through a company is £1,394 to £4,255 a year better off than buying in their own name, which is several times what the rate rise takes. Moving a property already held personally is a different proposition, because the transfer is a disposal at market value: stamp duty on the full value, capital gains tax on the whole gain, and the mortgage redeemed and replaced. That comes to £42,604 to £66,697 on our four cases, and takes 13.5 to 40.8 years of tax saving to recover.

The company saving also depends on leaving the profit in the company. Draw it out as a dividend and a higher-rate landlord pays 19% corporation tax and then 35.75% dividend tax, a combined 47.96% against 44% in their own name. We have set out the full workings, including four worked profit and loss accounts, in our analysis of limited company ownership.

What is happening with Making Tax Digital?

It starts in April 2027 as planned, with one concession on penalties. Paragraph 2.36 of the Budget 2026 Overview of Tax Legislation and Rates confirms that late submission penalty points will not apply to quarterly updates for the 2027 to 2028 tax year for anyone required to join in April 2027. Those quarterly updates still have to be sent before the annual return can be filed, and the penalty for missing the annual deadline is unchanged.

The Budget document also says the government is deferring the rollout "to several taxpayer groups until further notice". Paragraph 2.37 names them: people eligible for qualifying care relief, non-UK resident foreign entertainers and sportspeople, and expected non-resident customers. No ordinary landlord falls into any of those categories, so this is not the reprieve it first reads as.

The thresholds are unchanged. Landlords with qualifying income over £30,000 join from April 2027, and those over £20,000 from April 2028. Qualifying income is gross rent, not profit: HMRC guidance updated on 11 September 2026 defines it as "the amount before expenses (also known as turnover)". A landlord with £32,000 of rent and £9,000 of costs is inside the April 2027 group, not outside it.

What is the new rental data reporting consultation?

HMRC wants rental income data directly from letting agents and tenancy deposit schemes. The consultation Improving Property Income Data Reporting was published on 28 October 2026 and runs to 20 January 2027.

Two datasets are in scope: rental income data provided by letting agents, and tenancy deposit data provided by the deposit protection schemes. The framework is Schedule 23 of Finance Act 2026, building on HMRC's existing data-gathering powers under Schedule 23 of Finance Act 2011. HMRC says the objective is to "support taxpayers to get their tax right the first time, while reducing the tax gap", and acknowledges that the reforms "will create new obligations for a large and varied population of letting agents, including businesses that do not currently report to HMRC".

We think this will change more landlords' day-to-day administration than the rate rise will. Put alongside Making Tax Digital, it means rent collected through an agent and deposits registered with a scheme become visible to HMRC independently of what the landlord files. A separate measure takes the same approach abroad: from January 2029 the UK joins an international agreement to exchange information automatically on real estate, with the first data exchanges in January 2030, aimed at undeclared foreign property income and gains.

What else in the Budget affects landlords?

Several smaller measures, none large on its own. The table below lists each with its date and its effect.

MeasureDateWhat it means
Savings income rates rise to 24%, 44% and 49%6 April 2027Applies UK-wide. Relevant to deposits held outside an ISA
Cash ISA limit stays at £20,0006 April 2027The planned cut to £12,000 for under-65s is reversed
Trading allowance rises from £1,000 to £3,0006 April 2027This is the trading and miscellaneous income allowance. The £1,000 property allowance was not changed
Mileage at 55p for the first 10,000 business miles made permanent, higher rate to 35p55p now permanent, 35p from 6 April 2027Applies to landlords claiming mileage on property visits
VAT on domestic electricity cut from 5% to 0%1 October 2026 to 1 July 2027Expected to take around £50 off the annual Ofgem price cap in April 2027
Household Energy Payment of £100From January 2027Paid into bank accounts of households in England in council tax bands A to D. It follows the resident, not the owner
Ofgem asked to abolish gas standing chargesTarget end of 2027Standing charges average £108 a year. Costs move into unit rates instead
National Living Wage rises 3.9% to £13.21 an hour1 April 2027Feeds into cleaning, maintenance and contractor costs
Capital gains tax late filing penalties stop accruing once a disposal is reported on Self Assessment28 October 2026Applies to UK residential property disposal returns
Stamp duty removed on the rent element of assured tenancies1 May 2026, now in Finance Bill 2026-27Removes the SDLT return requirement triggered solely by rent
A landlord registration fee for the private rented sectorNot statedListed in Budget 2026 among measures with no net increase to borrowing. No fee level was published

That last line is the one to watch. The Budget names the fee but gives no amount and no start date, so it is a commitment with no cost attached to it yet.

What should landlords do now?

Three things, and none of them needs doing this week. The rise takes effect on 6 April 2027, which leaves well over a year.

First, check which side of the £30,000 line your gross rent falls on, since Making Tax Digital arrives in April 2027 alongside the rate change and uses turnover rather than profit. A landlord caught by both at once has a reporting change and a tax change in the same month.

Second, work out your own number instead of relying on an average. The range on our own modelling runs from a £58 gain to a £755 cost across four otherwise similar properties, and the difference is driven almost entirely by whether there is a mortgage and what rate the landlord pays.

Third, if a limited company is on your mind, treat buying and transferring as two separate questions with two different answers. Our figures and the government's costing point the same way on the second of those. You can read more about tax for landlords on our site.

We will update this post when Finance Bill 2026-27 is published and the drafting is available to check.

Sources

Government

Hello Neighbour

This post is general guidance on tax policy announced at Budget 2026 and is not tax or legal advice. Hello Neighbour is a letting platform, not a tax adviser. Rates and dates are those announced as at 30 October 2026 and remain subject to Finance Bill 2026-27.

The rate rise costs £446 to £755 a year on the two properties we model. A high-street agent takes £2,234 to £5,354 on the same two. Compare letting agent fees.