Budget 2026
Budget 2026 for landlords: what the 28 October Budget means for you
Budget 2026
The Budget on 28 October 2026 raised tax on rental income again. From 6 April 2027, landlords who own property in their own name will pay income tax on rental profits at 24%, 44% or 49%, two percentage points more than the rates already set for that date and four points more than today. Mortgage interest relief rises to 24% at the same time. Stamp duty, capital gains tax and corporation tax were left unchanged.
Budget 2025 created separate income tax rates for property income from April 2027, two percentage points above the main rates. Budget 2026 added two more points. The result:
| Band | 2026 to 2027 | 2027 to 2028 (set in 2025) | 2027 to 2028 (Budget 2026) |
|---|---|---|---|
| Basic rate | 20% | 22% | 24% |
| Higher rate | 40% | 42% | 44% |
| Additional rate | 45% | 47% | 49% |
The income tax bands themselves do not change: the personal allowance stays at £12,570 and the basic rate band covers the first £37,700 of taxable income above it. The new rates will be legislated in Finance Bill 2026 to 2027.
6 April 2027, the start of the 2027 to 2028 tax year. Rental profits for the current 2026 to 2027 tax year are taxed at the normal 20%, 40% and 45%.
The rates apply across England, Wales and Northern Ireland. The government has given the Scottish and Welsh governments the ability to set property income rates within their existing income tax powers, so landlords who are Scottish taxpayers should watch for the Scottish Government’s decision.
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Individual landlords still cannot deduct mortgage interest from rental income. Instead they get a tax reduction on their finance costs. The Treasury’s costings confirm that finance cost relief will continue to be aligned to the property basic rate, so the reduction rises from 20% to 24% in 2027 to 2028.
That softens the blow for landlords with large mortgages. Because both the tax rate and the relief rise by four points, the extra tax works out at roughly 4% of your rental profit after interest, whichever band you are in. Landlords with little or no mortgage feel the full rise. Our guide to the rental income tax increase has worked examples and a calculator.
No. The property income rates apply to income tax, so they cover landlords who own property personally or in a partnership. Companies pay corporation tax, which stays at 19% on profits up to £50,000 and 25% above £250,000, with marginal relief in between. Dividend tax rates stay at 10.75%, 35.75% and 39.35%.
The Treasury expects some landlords to incorporate in response, but says this is expected to be limited. Moving existing properties into a company is usually treated as a sale at market value, which can bring capital gains tax, stamp duty and new mortgages. Read should you put your buy-to-let in a limited company and take advice before deciding.
No change. Buying an additional home in England or Northern Ireland still carries rates five percentage points above the standard rates, so 5% on the first £125,000, 7% up to £250,000 and 10% up to £925,000.
No change. Gains on residential property remain at 18% for basic-rate and 24% for higher and additional-rate taxpayers.
Landlords and sole traders with qualifying income over £30,000 must join Making Tax Digital for Income Tax from 6 April 2027. The Budget confirmed that late-submission penalties will not apply to quarterly updates in 2027 to 2028 for those joining in April 2027. See Making Tax Digital from April 2027.
The Budget confirmed a £65 fee for the “Register your rental property” service for private landlords and properties in England from 15 December 2026. Check your region’s deadline.
From April 2028, owners of homes in England valued at £2 million or more will pay an annual surcharge, uprated by inflation each year. The Budget confirmed a deferral scheme and a series of discounts and exemptions.
From January 2029, the UK will exchange information with other countries about real estate, to help HMRC find undeclared foreign rental income and gains.
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It raised the income tax rates on property income by a further two percentage points from 6 April 2027, to 24%, 44% and 49%. Mortgage interest relief rises to 24%. Stamp duty, capital gains tax and corporation tax were unchanged.
6 April 2027, for the 2027 to 2028 tax year.
No. The new rates apply to income tax. Companies pay corporation tax at 19% to 25%, which the Budget did not change.
No. The higher rates for additional dwellings, five percentage points above the standard rates, stay in place.
No. Capital gains tax on residential property stays at 18% and 24%.
The 24%, 44% and 49% rates were announced at the Budget and will be legislated in Finance Bill 2026 to 2027.
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Information, not advice. This article is general information based on the Budget documents published on 28 October 2026. Announced rates still need to be passed into law. It is not a personal recommendation and does not constitute financial, investment, mortgage, tax or legal advice. Speak to a qualified tax adviser about your own position.
