Property Income Tax Changes: What Landlords Need to Know

New Property Income Tax Rates

HMRC is currently introducing separate tax rates for property income, similar to how dividend and savings income are taxed.

In the 2025/26 tax year, as in previous years, rental income is taxed at:

• 20% for basic rate taxpayers
• 40% for higher rate taxpayers
• 45% for additional rate taxpayers

From the 2027/28 tax year, property income will instead be taxed at:

• 22% for basic rate taxpayers
• 42% for higher rate taxpayers
• 47% for additional rate taxpayers

What This Means for Landlords

This change represents a 2% increase across all tax bands, meaning landlords will pay more tax on their property income.

While the percentage increase may seem modest, the cumulative impact on profitability could be significant, particularly for those with larger portfolios.

When Will These Changes Happen?

These changes are scheduled to take effect from April 2027. While that may seem some way off, early planning can help you manage the impact more effectively.

Navigating Property Tax Changes with Confidence

Navigating the way through changing tax rules can be complex. Our team is here to help you understand what these changes mean and how to plan ahead with confidence.

If you would like to discuss how the upcoming property income tax changes may affect you, get in touch with Stratos today.

FAQ’s

When do the new property tax rates start?

The new rates will apply from the 2027/28 tax year, starting in April 2027.

How much will tax increase?

All tax bands for property income will increase by 2%.

Will this affect all landlords?

Yes, the changes apply to all landlords earning rental income, regardless of portfolio size.

Can I take action now?

Yes. Planning ahead can help reduce the long-term impact of these changes.