Individual landlords in England, Wales and Northern Ireland will pay income tax on rental profit at 24%, 44% or 49% from 6 April 2027, after the Budget of 28 October 2026 added two points to rates already raised a year earlier. Today rent is taxed like wages, at 20%, 40% and 45%. Families abroad who let UK property in their own names are caught too.
How Rent Gets Its Own Tax Rates
Finance Act 2026 created separate “property rates” from 2027-28 at 22%, 42% and 47%; paragraph 1.2 of HMRC’s Overview of Tax Legislation and Rates (OOTLAR) now sets them at 24%, 44% and 49%. The bands do not move: basic rate on the first £37,700 of taxable income, additional rate above £125,140.
| Band | 2026-27 | Planned before this Budget | From 6 April 2027 |
|---|---|---|---|
| Basic | 20% | 22% | 24% |
| Higher | 40% | 42% | 44% |
| Additional | 45% | 47% | 49% |
On £10,000 of rental profit taxed in the higher band, that is £4,000 now and £4,400 from April 2027. From the same date, HMRC’s 2025 policy paper says, allowances such as the £12,570 personal allowance are set first against other income, so more rent may be taxed at the property rates.
Scotland and Wales have been given powers to set separate rates on rent. For the first two-point rise, HMRC estimated 2.4 million landlords would pay more in 2029-30; the new papers give no updated count.
Mortgage Interest: An Open Question
Individual landlords cannot deduct mortgage interest as an expense; they get a tax reduction instead. HM Treasury guidance from November 2025 says this reduction will be given at the property basic rate, then set at 22%, so £1,000 of interest would cut the bill by £220. The Budget 2026 documents we read do not say whether it now follows the rate to 24%.
Families Abroad With UK Lettings
Living abroad does not end UK tax on UK rent, GOV.UK says. Under the Non-resident Landlord Scheme, a letting agent, or a tenant paying more than £100 a week, deducts basic-rate tax from the rent unless HMRC approves gross payment, and the landlord usually files a tax return. As our check of the billionaire exodus claim shows, where a family lives and where its assets are taxed are separate questions.
Companies differ: non-UK company landlords have paid corporation tax, not income tax, on UK property profits since 6 April 2020, so these rates do not apply to them. See our UK guide and Budget overview.
What to watch
- Any separate Scottish or Welsh rates on rent for 2027-28.
- How HMRC treats mortgage interest relief and Non-resident Landlord Scheme deductions under the new rates.
- HMRC’s consultation on letting agents reporting rental data, open until 20 January 2027.
A fair caveat
The rates still need Parliament’s approval in the Finance Bill 2026-27. Our example ignores reliefs and other income.
Questions to bring to your advisors
Who owns each of our UK properties: individuals, a trust or a company? Which band does the rent fall into once other income is counted? These are questions to bring to your lawyers and tax advisors, not advice.
