Landlord tax changes from April 2027
From 6 April 2027, profits from letting property have their own income tax rates. In England and Northern Ireland they’re 22%, 42% and 47% for 2027–28, where 2026–27 has 20%, 40% and 45%. Mortgage interest relief goes up to 22% to match. Scotland and Wales can set their own property rates.
Checked against HMRC’s guidance and the law by Cristiano Betta of Work Betta Ltd, which makes Tillslip, on : Finance Act 2026 s7, Finance Act 2026 s6, Income Tax: changes to tax rates for property, savings and dividend income.
| Band | 2026–27 | 2027–28 |
|---|---|---|
| Basic rate | 20% | 22% |
| Higher rate | 40% | 42% |
| Additional rate | 45% | 47% |
The new rates
For 2027–28 the property basic rate is 22%, the property higher rate 42% and the property additional rate 47%. They apply to property income that would otherwise be taxed at the basic, higher or additional rate, where 2026–27 has 20%, 40% and 45%. Parliament sets them for each tax year.
Sources: Finance Act 2026 s7 · Finance Act 2026 s6 · ITA 2007 s6D · Finance Act 2026 s2
Who pays them
People with profits from letting UK or overseas property, including partners in a property partnership. Companies aren’t affected: they pay Corporation Tax, not income tax.
Sources: ITA 2007 s17A · Income Tax: changes to tax rates for property, savings and dividend income · PIM2054: the finance cost restriction
Scotland and Wales
From 2027–28 the Scottish Parliament and the Senedd can set property rates for their own taxpayers. The 22%, 42% and 47% rates are for England and Northern Ireland. In Wales and Scotland, the 2027–28 property rates depend on what the Senedd and the Scottish Parliament set.
Sources: Finance Act 2026 Schedule 2 · Income Tax: changes to tax rates for property, savings and dividend income
Your allowance goes on other income first
From 2027–28 your Personal Allowance and reliefs are set against your wages, pension or self-employed profit before your rent, and your rental profit counts as the top of your income, below any savings and dividends. So more of your rent can fall in a higher band. The Personal Allowance stays at £12,570, and the UK basic rate band at £37,700, up to and including 2030–31.
Sources: Finance Act 2026 s6 · ITA 2007 s25 · Finance Act 2026 s10
Mortgage interest relief goes to 22%
The tax reduction for finance costs on a home you let is worked out the same way, as the lowest of three amounts, but at the property basic rate: 22% for 2027–28, up from 20%.
Sources: ITTOIA 2005 s274AA · Finance Act 2026 s7
Work out your mortgage interest relief
Making Tax Digital from April 2027
If your self-employed and rental income, added together before expenses and not counting partnership profits, was over £30,000 in 2025–26, you need to use Making Tax Digital for Income Tax from 6 April 2027, unless you’re exempt: digital records and quarterly updates through compatible software. Over £20,000 in 2026–27 means from 6 April 2028. Tillslip keeps your receipts in order, but it isn’t Making Tax Digital software and doesn’t send anything to HMRC.
Sources: Making Tax Digital for Income Tax: if and when · Making Tax Digital: work out your qualifying income
Already changed: furnished holiday lets
The furnished holiday lettings rules ended from 6 April 2025, so mortgage interest on a holiday let now gets the same tax reduction as any other home you let.
Source: PIM2054: the finance cost restriction
Tillslip keeps your property costs apart
Snap each receipt and Tillslip sorts it under that property, by SA105 box, with mortgage interest kept apart in box 44. It doesn’t send anything to HMRC.
Also: Landlord expenses · Mileage calculator · Mileage rates · SA105 box by box · Keeping receipts · Self-employed expenses · Landlord expenses spreadsheet · Mortgage interest calculator