GOVERNMENT RAISES PROPERTY INCOME TAX RATES FROM APRIL 2027

The government announced a further two percentage point rise in property income tax rates from April 2027. The basic, higher and additional rates in England will reach 24%, 44% and 49% respectively, according to the Budget. The measure applies to unincorporated landlords. The 2025 Budget had already scheduled rates of 22%, 42% and 47% from the same date. The government announced no further changes to tax rates on employment or dividend income.

Finance cost relief will remain aligned with the basic property income tax rate. Under the announced rates, a basic-rate landlord earning £12,000 a year in rental income after expenses would pay £2,880 in tax, compared with £2,400 at the current rate. The equivalent bill for a higher-rate landlord would rise from £4,800 to £5,280. The government called its approach “fair and proportionate” and said 84% of income taxpayers would be unaffected. It estimated that the top 10% of households would account for around half the revenue from the further increase.

Harry Johnston, who owns 40 flats in Manchester, said he would raise rents. “We appear to have become the cash cow – but it is just going to result in higher rents,” he said. Heather Powell of Blick Rothenberg said she expected some private landlords to sell their properties and invest elsewhere. Mark Imray, who lets homes in the East Midlands and East of England, also criticised the increase. Simon Misiewicz of Optimise Accountants urged landlords to review their cash flow and borrowing costs ahead of the April 2027 change.