12/05/2026
Increase in Property Taxation rates
From 6 April 2027 onwards, HMRC are planning to increase the rate of income tax that applies to rental profits. In short, the rate of taxation will increase by 2 percentage points across each individual tax band.
The changes for rental profits may be summarised per the table below:
| Tax Band | Pre 6 April 2027 Tax Rate | Tax Rate from 6 April 2027 onwards |
|---|---|---|
| Basic Rate | 20% | 22% |
| Higher Rate | 40% | 42% |
| Additional Rate | 45% | 47% |
The above income tax rate changes will apply to both residential and commercial rental profits.
Landlords currently get tax relief for mortgage interest payments made on residential let properties in the form of a 20% tax reducer (this applies irrespective of which tax band the property income falls within).
From 6 April 2027 the tax relief on these mortgage interest payments will increase to 22%, which will coincide with the increase in tax rates applying to taxable rental profits. With the increase in income tax rates on property income, alternative structures to holding properties such as holding it through a company may wish to be considered.
If you have any questions concerning the above, please feel free to get in touch with Alan Rolfe using the details below.
