Government Landlord Tax Hikes: How Much More Will You Pay?

Landlords

Posted in Aug 15 , 2026

Changes to Tax rates for Property, Savings and Dividend Income apply in England, Wales and Northern Ireland. Residential finance cost relief will also be calculated at the new 22% property basic rate.

For some landlords , the change will increase their tax bill. The exact impact depends on their property income and wider tax position.

What Are the Government Landlord Tax Hikes?

The government is introducing separate Income Tax rates for property income from the 2027 to 2028 tax year.

Property income rate	Current rate	From 6 April 2027
Basic	20%	22%
Higher	40%	42%
Additional	45%	47%

The change does not mean every landlord will pay the highest rate on all rental income. Your actual tax position depends on your income, property profits, losses, reliefs and other circumstances.

HMRC also confirms that the Property Allowance and Rent a Room Scheme remain unchanged.

How Much More Tax Could You Pay?

To explain it simply, if £10,000 of taxable property income fell entirely within the basic property rate:

At 20%, the tax would be £2,000.
At 22%, it would be £2,200.
Difference: £200.

HMRC's technical guidance confirms that property income will sit within a new order of taxation, after employment, trading and other non-property income, and before savings and dividend income.

What Happens to Mortgage Interest Tax Relief?

Individual landlords do not deduct residential finance costs directly from rental income when calculating their property profits. Instead, they receive a tax reduction for eligible finance costs.

From 2027 to 2028, HMRC says this relief will be calculated at the new property basic rate of 22%. This means your mortgage position also matters, not just rental income.

Is the Landlord Tax Change Happening in 2026 or 2027?

The new property income tax rates take effect from 6 April 2027. This is separate from Making Tax Digital for Income Tax, which has its own implementation timetable and reporting requirements.

Which Landlords Should Review Their Position?

You should consider reviewing your position if you:

Receive substantial rental income.
Have residential mortgage finance costs.
Have employment, pension or other taxable income alongside rent.
Own several rental properties.
Are considering buying another investment property.
Are considering changing how your properties are owned.

Don't assume selling a property or moving it into a company automatically solves the issue. Those decisions involve wider tax, mortgage, legal and administrative considerations.

Should You Raise the Rent, Sell or Keep Your Property?

The tax changes might make you question whether your current properties still make financial sense. Before making a decision, look at the full picture:

Review	What to consider
Rental income	Is the current rent appropriate for the local market?
Property costs	What do maintenance, insurance, and management cost?
Mortgage	How do finance costs affect your overall position?
Tax	How will the new property income rates affect you?
Property value	What is the property worth today?
Future plans	Does the property still fit your investment strategy?

As a landlord, you need to check the net position, as a higher tax bill or strong rent does not mean the property is good or bad.

What Should Landlords Do Before April 2027?

Don’t panic yet; you still have time to review your portfolio before the new property income rates take effect.

If you're considering another purchase, calculate the expected return using the tax rules and costs relevant to your circumstances rather than relying on gross rental income alone.

How Cribs Estates Fits

Tax rates are outside a landlord's control, but property management is different.

Cribs Estates provides landlord and property management support covering areas such as tenant sourcing,property management, maintenance and portfolio support.

Its existing buy-to-let guidance also focuses on rental yields, reducing void periods, maintaining properties and regularly reviewing portfolio performance.

Reviewing your portfolio ahead of the 2027 changes?

Explore Cribs Estates' property management services to see how professional management fits into your overall strategy.

FAQs

When do the new landlord tax rates start?

The new government landlord tax hikes take effect from 6 April 2027 for the 2027 to 2028 tax year.

How much is landlord tax increasing in 2027?

The new property income rates will be 22%, 42% and 47%, compared with the current 20%, 40% and 45% rates.

Will all landlords pay more tax?

Not necessarily by the same amount. The effect depends on your taxable property income and wider tax circumstances.

Do landlords still get mortgage interest tax relief?

Eligible residential finance costs will continue to receive tax relief. From 2027 to 2028, HMRC says the relief will be calculated at the 22% property basic rate.

Should I move my rental property into a limited company?

There is no universal answer. Company ownership involves tax, financing, legal and administrative considerations. Get individual advice before changing your ownership structure.

Will landlords increase rents because of the tax changes?

There is no guaranteed outcome. Whether you can increase rent depends on your local rental market, tenant demand, and what comparable properties achieve.

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Government Landlord Tax Hikes: How Much More Will You Pay?

Anyone who owns a rental property has recently been left wondering what the new landlord tax hike means for their actual income. From 6 April 2027, separate Income Tax rates for property income will be 22% at the basic rate, 42% at the higher rate and 47% at the additional rate. Changes to Tax rates for Property, Savings and Dividend Income apply in England, Wales and Northern Ireland. Residential finance cost relief will also be calculated at the new 22% property basic rate.For some landlords, the change will increase their tax bill. The exact impact depends on their property income and wider tax position.What Are the Government Landlord Tax Hikes?The government is introducing separate Income Tax rates for property income from the 2027 to 2028 tax year.Property income rateCurrent rateFrom 6 April 2027Basic20%22%Higher40%42%Additional45%47%The change does not mean every landlord will pay the highest rate on all rental income. Your actual tax position depends on your income, property profits, losses, reliefs and other circumstances.HMRC also confirms that the Property Allowance and Rent a Room Scheme remain unchanged.How Much More Tax Could You Pay?To explain it simply, if £10,000 of taxable property income fell entirely within the basic property rate:At 20%, the tax would be £2,000.At 22%, it would be £2,200.Difference: £200.HMRC's technical guidance confirms that property income will sit within a new order of taxation, after employment, trading and other non-property income, and before savings and dividend income.What Happens to Mortgage Interest Tax Relief?Individual landlords do not deduct residential finance costs directly from rental income when calculating their property profits. Instead, they receive a tax reduction for eligible finance costs.From 2027 to 2028, HMRC says this relief will be calculated at the new property basic rate of 22%. This means your mortgage position also matters, not just rental income. Is the Landlord Tax Change Happening in 2026 or 2027?The new property income tax rates take effect from 6 April 2027. This is separate from Making Tax Digital for Income Tax, which has its own implementation timetable and reporting requirements.Which Landlords Should Review Their Position?You should consider reviewing your position if you:Receive substantial rental income.Have residential mortgage finance costs.Have employment, pension or other taxable income alongside rent.Own several rental properties.Are considering buying another investment property.Are considering changing how your properties are owned.Don't assume selling a property or moving it into a company automatically solves the issue. Those decisions involve wider tax, mortgage, legal and administrative considerations.Should You Raise the Rent, Sell or Keep Your Property?The tax changes might make you question whether your current properties still make financial sense. Before making a decision, look at the full picture:ReviewWhat to considerRental incomeIs the current rent appropriate for the local market?Property costsWhat do maintenance, insurance, and management cost?MortgageHow do finance costs affect your overall position?TaxHow will the new property income rates affect you?Property valueWhat is the property worth today?Future plansDoes the property still fit your investment strategy?As a landlord, you need to check the net position, as a higher tax bill or strong rent does not mean the property is good or bad.What Should Landlords Do Before April 2027?Don’t panic yet; you still have time to review your portfolio before the new property income rates take effect. If you're considering another purchase, calculate the expected return using the tax rules and costs relevant to your circumstances rather than relying on gross rental income alone.How Cribs Estates FitsTax rates are outside a landlord's control, but property management is different.Cribs Estates provides landlord and property management support covering areas such as tenant sourcing,property management, maintenance and portfolio support.Its existing buy-to-let guidance also focuses on rental yields, reducing void periods, maintaining properties and regularly reviewing portfolio performance.Reviewing your portfolio ahead of the 2027 changes? Explore Cribs Estates' property management services to see how professional management fits into your overall strategy.FAQsWhen do the new landlord tax rates start?The new government landlord tax hikes take effect from 6 April 2027 for the 2027 to 2028 tax year.How much is landlord tax increasing in 2027?The new property income rates will be 22%, 42% and 47%, compared with the current 20%, 40% and 45% rates.Will all landlords pay more tax?Not necessarily by the same amount. The effect depends on your taxable property income and wider tax circumstances.Do landlords still get mortgage interest tax relief?Eligible residential finance costs will continue to receive tax relief. From 2027 to 2028, HMRC says the relief will be calculated at the 22% property basic rate.Should I move my rental property into a limited company?There is no universal answer. Company ownership involves tax, financing, legal and administrative considerations. Get individual advice before changing your ownership structure.Will landlords increase rents because of the tax changes?There is no guaranteed outcome. Whether you can increase rent depends on your local rental market, tenant demand, and what comparable properties achieve.

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