Property Income Tax Rates From April 2027: 24%, 44% and 49%

Property income tax rates are changing from 6 April 2027. Budget 2025 created separate income tax rates for property income of 22%, 42% and 47%, and Budget 2026 added a further two percentage points from the same date. That means rental profits will be taxed at 24%, 44% and 49% for landlords in England, Wales and Northern Ireland. This guide explains who is affected, how finance costs and allowances work under the new rates, and what to plan before April 2027.

The new property income tax rates

The government's Budget 2025 technical note set the first two-point rise, and the Budget 2026 document confirms a further two percentage points from April 2027.

Who the new property income tax rates apply to

The separate property rates apply to individuals with property income in England, Wales and Northern Ireland. The government has said it will work with the Scottish and Welsh governments so they can set their own property income rates within their existing income tax powers. Landlords who let through a company pay corporation tax rather than income tax on the company's profits, so speak to your accountant about how the change affects your structure.

Finance costs, allowances and losses

Under the design set out at Budget 2025:

• Mortgage interest relief for residential finance costs is calculated at the property basic rate, rather than the ordinary basic rate.
• The property allowance and Rent a Room Scheme are unchanged.
• Property losses carried forward must still be set against property income.
• Your personal allowance and other reliefs are set first against income that is not property, savings or dividend income, and only then against property income if any is left.

That last point matters for landlords with a salary. If your employment income uses up your personal allowance, all of your rental profit is taxed at the new property rates.

Overseas landlords and the NRL Scheme

The government has also said that tax withheld under the Non-Resident Landlord Scheme will be at the property basic rate. Our guide to the NRL Scheme explains how withholding works.

What London landlords should plan before April 2027

1. Ask your accountant to model your 2027 to 2028 tax bill at the new rates.
2. Check which band your rental profit falls into once your other income is counted first.
3. Review your rent against the market, because accurate pricing protects your net return. Our free rental valuation is a sensible starting point.
4. Keep voids short, because an empty month is lost income at any tax rate.
5. Keep clean records of rent and expenses, ready for your return.

How AIHPG helps

AIHPG is a lettings and management company, not a tax adviser, so we do not give tax advice. What we do is protect the gross rent the tax is worked out on: correct pricing from day one, short voids, and clear monthly statements your accountant can work from.