Landlord tax rates to reach 49%: what Budget 2026 actually changes
The 30-second summary
From 6 April 2027, the UK government plans separate property income tax rates of 24%, 44% and 49% for individuals in England, Wales and Northern Ireland. These rates concern taxable property income, not every pound of rent received. The change is announced for Finance Bill 2026–27, not yet a rate charged in 2026–27.
- Budget 2026 adds two percentage points to rates already scheduled for 2027.
- These are marginal rates on taxable property income, not gross rent.
- Scotland requires separate treatment; final legislation is still pending.
Applies to: England, Wales and Northern Ireland; Scotland's property income tax rules require separate treatment.
Check original government sources
Example in numbers
Example: £10,000 of taxable higher-rate property profit
- 2026/27: 40% main rate
- £4,000
- Previously scheduled: 42%
- £4,200
- New 2027/28 proposal: 44%
- £4,400
Simplified comparison for income entirely within the higher-rate band. All other income, reliefs and assumptions are held constant. This is not the tax due on gross rent.
The new rental income tax bands
For individual landlords in England, Wales and Northern Ireland, the announced property-income rates from 6 April 2027 are 24% at the basic rate, 44% at the higher rate and 49% at the additional rate. Budget 2025 had legislated rates of 22%, 42% and 47% for that year. Budget 2026 adds another two percentage points to each. Property income in 2026–27 is still charged at the ordinary main rates, generally 20%, 40% and 45% in these nations.
These are marginal rates. A landlord with income falling into more than one band does not pay the highest rate on all their taxable property income.
Does a 49% headline mean 49% of the rent?
No. The tax calculation starts from taxable property profit, not rent collected before allowable expenses. For residential landlords, mortgage finance-cost relief has separate restrictions and rules; do not subtract all mortgage payments from rental receipts to estimate taxable income.
The total tax due depends on other income, tax allowances, deductible expenses, finance-cost relief, and potentially different arrangements for jointly owned properties or property held through a company.
A simple impact example
Assume £10,000 of taxable property income falls wholly within a higher-rate band, with other income and all reliefs held constant. At the 2026–27 40% main rate, the illustrative tax is £4,000. At the original planned 2027–28 rate of 42% it would have been £4,200; the new announced 44% rate makes it £4,400. That is £200 more than the previously planned 2027 rate and £400 more than the current-year example. This excludes finance-cost tax relief and is not a personal tax calculation.
What landlords should do next
Review forecast rental profit and total taxable income for 2027–28, including financing costs and ownership structure. Keep supporting records, monitor the Finance Bill, and consider qualified tax advice before changing ownership or selling a property.
Use MMG's rental yield calculator to model rental cash flow. Its tax assumptions may not yet reflect the 2027–28 measure, so do not treat it as a final calculation of the announced rates.
Frequently asked questions
When do the 24%, 44% and 49% landlord tax rates start?
The announced start date is 6 April 2027 for the 2027–28 tax year, subject to the Finance Bill 2026–27.
Do landlords pay 49% on all rental income?
No. The additional rate applies only where taxable income falls into that band. Allowable expenses and other reliefs affect the taxable amount.
Does this apply to landlords in Scotland?
The announced 24%, 44% and 49% property rates cover England, Wales and Northern Ireland. Scottish rules and devolved tax powers need separate checking.
Official sources and fact-checks
Information has been checked against the following original publications. Announcements may change before legislation is enacted.
- HMRC: Income Tax changes to property and savings rates(29 October 2026)
- HM Treasury: Budget 2026 Annex A rates and allowances(28 October 2026)
- HMRC: Budget 2025 planned property rates(27 November 2025)
- ICAEW: Independent review of the property-income tax rise(28 October 2026)
What can you do next?
Explore a relevant MMG guide or calculator. Calculator assumptions may need updating when new rules take effect.