Increased Income Tax for Landlords: What the 2027 Property Tax Rise Really Means


If you are a landlord in the UK, a significant change is heading your way. From April 2027, an increased income tax on property profits will reshape what you actually take home. Here is what it means and how to prepare.

What Is Actually Changing

In the Autumn Budget, the Chancellor confirmed that property income tax rates will rise by 2% across all bands. From April 2027, landlords will pay 22%, 42%, or 47% on their rental profits, depending on their tax band.

This is not just a proposal. The measure was legislated in the Finance Act 2026, which received Royal Assent in March 2026. In short, it is now law. If you want the full breakdown of how this increased income tax works, this guide on increased income tax explains it clearly.

Who It Affects

Around 2.4 million landlords are expected to pay more as a result.

Crucially, this applies to individual landlords. Those who operate through limited companies are not affected by this particular rise, which is why many investors are now seriously considering incorporation.

Why It Matters More Than It Looks

A 2% increase might sound small, but the real impact is sharper than the headline suggests.

For leveraged landlords, the effect of Section 24 means tax is calculated on profit before mortgage interest is fully deducted. Combine that with this rate rise, and your spendable income can fall far more than 2%. Experts also warn the cost is likely to be passed on to tenants through higher rents.

How to Prepare

You still have time to plan, and that is the key message.

Speak to a qualified accountant about whether incorporation suits your situation. Review your portfolio now and identify which properties remain profitable and which may become marginal. Consider your wider strategy, including remortgaging, restructuring, or adjusting rents responsibly.

The landlords who act early will cope far better than those who wait until 2027 arrives.

Final Thoughts

This increased income tax is another step in a decade of tightening rules for landlords. It does not mean property no longer works as an investment, but it does mean planning matters more than ever.

Know your numbers, take professional advice, and make decisions with a clear head. Preparation today protects your profit tomorrow.

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