Your tenant pays £2,000 in rent. But how much of it do you actually keep?
Mortgage interest, repairs, insurance and letting costs soon take their share. From 6 April 2027, the new property income tax rates announced in the Autumn Budget 2026 will come into effect. The rates of 24%, 44% and 49% add another concern.
Will you pay more tax on money already spent elsewhere?
These landlord tax changes 2027 do not mean every pound of rent is taxed at those rates. Your taxable income, allowable expenses and finance costs all affect the final figure.
What Are the New Landlord Tax Rates for 2027?
The Autumn Budget 2026 confirmed higher separate tax rates for property income from 6 April 2027.
|
Tax band |
Property income tax rate from April 2027 |
|
Basic rate |
24% |
|
Higher rate |
44% |
|
Additional rate |
49% |
These new rental income tax rates UK replace the earlier planned rates of 22%, 42% and 47%. The changes are part of wider property income tax changes announced in Budget 2026. For landlords affected by the new rates, the changes mean reviewing your expected tax position before the 2027/28 tax year begins.
Are You Taxed on All the Rent Your Tenant Pays?
This is where many landlords become concerned about the tax on rental income UK rules. The answer is NO. You are not automatically taxed on every pound of rent your tenant pays.
For example, imagine you receive £30,000 in annual rent and have £5,000 of allowable property expenses. Your starting figure would be:
£30,000 rent received
− £5,000 allowable expenses
= £25,000
The final tax calculation depends on the relevant tax rules and your wider income. You need to know which rental property expenses tax deductible rules apply. Eligible costs can reduce taxable property income, whilst capital improvements often receive different tax treatment.
Why Does Mortgage Interest Still Cause Problems?
Many landlords pay substantial mortgage interest but cannot treat it like an ordinary deductible property expense. Under the residential finance cost rules, qualifying finance costs are generally dealt with through a tax reduction instead.
From April 2027, under the changes already announced, the separate property basic rate of 24% will also be relevant to residential finance cost relief. So mortgage costs still need careful attention when reviewing your future tax bill. Paying thousands of pounds in mortgage interest does not reduce your taxable rental income pound for pound.
How Much More Could Higher Rate Landlords Pay?
The impact depends on your individual circumstances, but from 6 April 2027, the higher property income tax rate will increase from 40% to 44%. Here is a simple example.
Suppose £10,000 of your income is taxable at the relevant property higher rate:
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At 40%, the tax would be £4,000.
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At 44%, the tax would be £4,400.
That is a difference of £400. For higher-rate taxpayers, the increase makes rental property tax planning more important before April 2027.
Which Rental Property Expenses Can Landlords Claim?
Keeping accurate records matters because legitimate expenses can reduce taxable rental income where they meet HMRC rules. Depending on your circumstances, allowable costs can include:
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Letting and management fees
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Repairs and maintenance
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Landlord insurance
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Relevant professional fees
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Other costs incurred wholly and exclusively for the rental business
The landlord tax allowance rules also matter. For example, some landlords may choose between claiming eligible expenses or using the £1,000 property allowance, depending on which approach applies and gives the better result.
What Should Landlords Review Before April 2027?
The new rates have already been announced, but they do not take effect until 6 April 2027. That gives landlords time to understand their position and prepare. Start by reviewing:
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Your rental income: Know how much rent you receive and how your taxable property income is calculated.
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Your allowable expenses: Keep clear records of genuine property costs.
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Your mortgage finance costs: Understand how the residential finance cost rules affect your tax calculation.
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Your wider income: Your rental income does not exist separately from your overall tax position.
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Your plans: Speak to a qualified tax adviser before making major decisions about ownership or restructuring.
A higher tax rate does not mean every landlord should make the same change. The right decision depends on your property, borrowing and wider financial position.
For landlords who want less involvement in daily issues, a fully managed letting service can provide support with tenant management, maintenance and rent collection.
Take the Pressure Out of Being a Landlord
The tax calculation itself should be handled with your accountant or tax adviser. Cribs Estates helps with the practical side of running your rental property.
Our property management London service supports landlords with day-to-day property matters, including tenant concerns and maintenance coordination. Our wider landlord services also help landlords manage the responsibilities that come with renting out a property.
Cribs Estates also provides property management Wimbledon support for landlords who want professional help managing their rental property in the local area.
The Autumn Budget 2026 has confirmed higher property income tax rates from April 2027. As the changes get closer, keeping on top of your property costs and day-to-day responsibilities becomes even more important.



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