Budget 2026 landlord tax rise: 24%, 44% and 49%

Last updated 28 Oct 2026

The Budget on 28 October 2026 raised income tax on property income by a further 2 percentage points from 6 April 2027. Landlords who are individuals will pay 24%, 44% and 49% on rental profits in England, Wales and Northern Ireland, instead of the 22%, 42% and 47% already set for that date.

It is announced, not yet law: the Budget document says it "will be legislated for in Finance Bill 2026-27". This page is general information, not tax advice.

What changed, and is it 2 points or 4?

Both figures are right. They measure from different starting points.

2 points on the plan. Budget 2025 had already set separate property rates of 22%, 42% and 47% from April 2027, now in section 7 of the Finance Act 2026. Today's Budget adds 2 points to each.
4 points on today. In 2026 to 2027, rental profits are still taxed at the main rates of 20%, 40% and 45%. Against those, April 2027 brings a 4-point rise.

The Office for Budget Responsibility says the rates "were already set to increase by 2 percentage points in April 2027", and "will increase by a further 2 percentage points to 24, 44, and 49 per cent".

Property income tax rates before and after

Rate	2026 to 2027	2027 to 2028, 2025 plan	2027 to 2028, announced
Basic	20%	22%	24%
Higher	40%	42%	44%
Additional	45%	47%	49%
Interest credit	20%	22%	24%

"2025 plan" is what Budget 2025 set; "announced" is the Budget of 28 October 2026. The interest credit is the section 24 tax credit on mortgage interest. Sources: Budget 2026 rates and allowances, Finance Act 2026, section 7 and the Budget 2025 technical note. The bands do not move. The personal allowance stays at £12,570 and the basic rate band at £37,700 in both years.

Who it applies to

Individual landlords. The policy costing says it "increases tax on property income for unincorporated landlords". Individual partners in a partnership are included.
Not companies. A company that lets property pays Corporation Tax on its profits, not these rates.
England and Northern Ireland. The new rates apply.
Wales. The Budget says the rates "apply across England, Wales and Northern Ireland". Section 8 of the Finance Act 2026 also lets the Senedd set Welsh property rates.
Scotland. The Budget's rates do not cover Scottish taxpayers. Section 8 lets the Scottish Parliament set Scottish property rates.

The property allowance and Rent a Room scheme are unchanged.

What happens to section 24 mortgage interest relief

You still cannot deduct mortgage interest from rental profit. Instead you get a tax credit on it, often called section 24.

2026 to 2027: the credit is 20%, the basic rate.
From April 2027, as set in 2025: the Budget 2025 technical note says relief "will be calculated at the property basic rate (22%)".
From April 2027, as announced today: the costing says finance cost relief "will continue to be aligned to the property basic rate". That makes the credit 24%.

A rising credit softens the blow for landlords with big mortgages. A higher-rate landlord still pays 44% on profit before interest and gets back only 24% of the interest.

Three worked examples

Each example is a landlord in England, with rent and costs flat across the years. Property income is taxed after salary, as the technical note sets out. "Profit" means rent minus allowable expenses, before mortgage interest.

1. Basic-rate landlord, one mortgaged flat. Salary £30,000. Rent £12,000, expenses £2,000, so profit £10,000. Mortgage interest £4,000. All the profit falls in the basic rate band.

	2026 to 2027	2027 to 2028, 2025 plan	2027 to 2028, announced
Tax on profit	£2,000	£2,200	£2,400
Less interest credit	£800	£880	£960
Tax on rental income	£1,200	£1,320	£1,440

Extra tax a year: £120 more than the 2025 plan, £240 more than today.

2. Higher-rate landlord, two flats. Salary £60,000. Rent £24,000, expenses £4,000, so profit £20,000. Mortgage interest £10,000. All the profit falls in the higher rate band.

	2026 to 2027	2027 to 2028, 2025 plan	2027 to 2028, announced
Tax on profit	£8,000	£8,400	£8,800
Less interest credit	£2,000	£2,200	£2,400
Tax on rental income	£6,000	£6,200	£6,400

Extra tax a year: £200 more than the 2025 plan, £400 more than today.

3. Landlord pushed into the higher band. Salary £40,000. Rent £18,000, expenses £4,000, so profit £14,000. Mortgage interest £7,000. After interest they make £7,000, so £47,000 in all, under the £50,270 higher rate threshold. But section 24 counts profit before interest, so income for tax is £54,000. £10,270 of profit is taxed at the basic rate and £3,730 at the higher rate.

	2026 to 2027	2027 to 2028, 2025 plan	2027 to 2028, announced
Tax on profit	£3,546	£3,826	£4,106
Less interest credit	£1,400	£1,540	£1,680
Tax on rental income	£2,146	£2,286	£2,426

Extra tax a year: £140 more than the 2025 plan, £280 more than today.

The pattern: the announced rise costs about 2% of profit after mortgage interest, whatever your band. The examples assume income under £100,000, where the personal allowance starts to taper.

What landlords can do

Only legitimate steps here. Be wary of anyone selling a scheme to avoid the rise.

Claim every allowable expense. Repairs, insurance, agent fees and accountant's fees all reduce profit. See landlord allowable expenses.
Keep good records. GOV.UK says to record every expense you claim, with receipts and invoices. From 6 April 2027, landlords with qualifying income over £30,000 must also use Making Tax Digital.
Time repairs with care. An expense reduces profit in the tax year it falls in. From April 2027 each £100 of repairs saves £24 for a basic-rate landlord, against £20 now. Never delay safety work or repairs a tenant needs to save tax.
Know the joint ownership rules. Spouses and civil partners who jointly own a let are normally taxed 50:50. If the property is really owned in unequal shares, Form 17 can match the tax to those shares, with evidence such as a declaration or deed. Other joint owners are usually taxed on their share.
Weigh incorporation carefully. Moving property into your own company is treated as a sale at market value for Capital Gains Tax. It can also bring Stamp Duty Land Tax on market value, plus refinancing costs, and money you take out of the company is taxed again as salary or dividends. The costing expects this response "to be limited". Take advice from a qualified tax adviser first.

How much it raises

The policy costing puts the yield at £455 million in 2031 to 2032. The OBR thinks the two rises together risk "a steady rise in rents", as fewer landlords enter the market and more costs pass to tenants.

Frequently asked questions

When does the landlord tax rise start? From 6 April 2027, the start of the 2027 to 2028 tax year. Your 2026 to 2027 rental profits are taxed at 20%, 40% and 45%.

Is the 24% rate law yet? No. It is announced and will be legislated in Finance Bill 2026-27. The 22%, 42% and 47% rates are already in the Finance Act 2026.

Why do some reports say 2 points and others 4? Budget 2025 already set a 2-point rise for April 2027. Today added 2 more, so it is 4 points above the rates landlords pay now.

Does the rise apply to limited companies? No. It applies to individual landlords and individual partners. Companies pay Corporation Tax.

Does it apply in Scotland? No. The Finance Act 2026 lets the Scottish Parliament set Scottish property rates.

What happens to the section 24 tax credit? It follows the property basic rate, so it rises from 20% today to 24% from April 2027, as announced.

Will I pay 44% on all my rent? No. The rates apply to profit after allowable expenses, by band. Only the part of your income above the £50,270 threshold pays the higher rate.

Keep your records in one place

Letbook is a compliance tracker for landlords, not accounting software. It does not work out tax or file returns. You can upload receipts, invoices and certificates to each property, so they are dated and in one place when you do your return. Sign up free.

Sources

Facts checked on 28 October 2026. The 24%, 44% and 49% rates and the 24% credit are announced, not yet legislated. This page is general information, not tax advice.