Landlord tax changes from 2026 to 2028 by date

Already in force

These have all happened. If your planning is more than a year old, several of them are probably not in it.

Making Tax Digital started on 6 April 2026

Landlords with qualifying income over £50,000, tested on the 2024/25 return, were mandated from 6 April 2026. The mechanics come from the Income Tax (Digital Obligations) Regulations 2026, SI 2026/336. The two things landlords get wrong are both in the definition: qualifying income is gross, not profit — turnover before expenses — and property and self-employment income are added together. A landlord with £45,000 of rent and a £10,000 mortgage is tested on £45,000. Quarterly updates are due on 7 August, 7 November, 7 February and 7 May, they are summaries, separate from the tax return, and no tax is paid quarterly. Full detail is in the MTD guide and the MTD checker.

Dividends got more expensive on 6 April 2026

The ordinary rate rose from 8.75% to 10.75% and the upper rate from 33.75% to 35.75%. The additional rate is 39.35%, unchanged. This only matters to landlords holding property through a company, and it matters a great deal: it is the cost of getting money out, and it moved against extraction at exactly the moment the April 2027 rate change moves in favour of companies. See property company accounts.

Incorporation relief now has to be claimed

Incorporation relief under section 162 TCGA 1992 used to apply automatically. For transfers of a business on or after 6 April 2026, a claim must be made in the transferor's Self Assessment return for the year of transfer, with brief details of the transaction, the tax computations and the type of business transferred. Section 162A TCGA 1992, the old election out, is repealed. The legislation is section 39 of the Finance Act 2026. A missed claim is a very expensive administrative error, since the alternative is the whole latent gain crystallising at 18% or 24%. Our incorporation guide covers when the route works and when it does not.

Changes still to come

6 April 2027 — property income gets its own tax rates

This is the largest single change on the page and it is still under-priced. From 6 April 2027, property income is taxed at separate rates:

It was announced at Budget 2025 and legislated in the Finance Act 2026, which received Royal Assent on 18 March 2026. It applies to property letting income and to property income distributions from investment funds. The stated rationale is that property, savings and dividend income bear no National Insurance, so the rates rise to narrow the gap with earned income.

Three details decide who it hits:

• The Section 24 reducer moves to 22%. Taxpayers continue to receive relief the same way, at Step 6 of the income tax calculation, but at the property basic rate from 2027/28. That offsets only a small part of the rate rise.
• Scope is England, Wales and Northern Ireland. In Wales the rates apply through the Welsh rates of income tax. A Scottish taxpayer's property income stays on the Scottish rates. The Finance Act 2026 will also let the Scottish Parliament and the Senedd set their own property income rates, from a date the Treasury has not yet appointed.
• Companies are not mentioned. The measure addresses individuals, partnerships, trusts and estates.

Worked example — illustrative. A higher-rate landlord has property profit of £30,000 before finance costs, and £10,000 of mortgage interest. Assume she is a higher-rate taxpayer in both years and that the finance costs are the lowest of the three figures that limit the reducer.

An extra £400 on the same property and the same rent. The rate rise costs £600 and the improved reducer gives £200 back. Scale it: the extra cost is broadly 2% of the property profit less 2% of the finance costs, so the more geared the portfolio, the smaller the increase — and the less geared it is, the closer the cost gets to a flat 2% of profits.

6 April 2027 and 6 April 2028 — the remaining MTD thresholds

Note the test year. The £30,000 threshold is decided by the return you file for 2025/26, which you may already have filed or be preparing now. The £20,000 threshold is decided by 2026/27 — the year in progress. Qualifying income of £20,000 or less is an automatic and permanent exemption. Partnerships do not currently need to use MTD for Income Tax, and an individual's share of partnership profit is not qualifying income.

There are no penalties for missing a quarterly update deadline for the 2026/27 tax year, but each update still has to be sent before the tax return. After that, late submission is points-based — one point per missed update or return, a threshold of 4 points, then a £200 penalty and £200 for each further miss. Late payment penalties are separate, and in your first year under the new rules you have 30 days to pay, or to set up a payment plan with HMRC, before one applies.

April 2028 — the High Value Council Tax Surcharge

A new surcharge on owners of residential property in England worth £2 million or more, in four bands: £2,500 a year up to £2.5 million, £3,500 up to £3.5 million, £5,000 up to £5 million and £7,500 above £5 million. It is levied on the owner of the property, so a landlord pays it and the tenant does not. Values are based on 2026, charges rise with CPI inflation from 2029/30, first bills are issued in March 2028, and revaluations run every five years. The government expects fewer than 1% of properties in England to be in scope, so for most landlords it will not apply, but a single high-value house or a converted building can put a small portfolio inside it.

Standing figures underneath all of it

Income tax, 2026/27

Personal allowance £12,570; basic rate band to £37,700; higher rate £37,701 to £125,140; additional rate above £125,140. Under the Section 24 mechanism a landlord's taxable income includes the mortgage interest, which can take it over these thresholds — over £50,270 into higher rate, over £100,000 into the personal allowance taper, or over the High Income Child Benefit Charge threshold.

Capital gains tax

Residential property is taxed at 18% within the basic rate band and 24% above it. The annual exempt amount is £3,000 for individuals and £1,500 for trustees in 2024/25, 2025/26 and 2026/27. Report and pay within 60 days of completion. Private Residence Relief carries a nine-month final period exemption for disposals on or after 6 April 2020, under section 223 TCGA 1992. Detail is in the CGT guide.

Inheritance tax

The nil-rate band £325,000 and the residence nil-rate band £175,000 remain frozen to 5 April 2031. Unused agricultural and business property relief allowances become transferable between spouses and civil partners from 6 April 2026. For a landlord whose wealth is mostly property and mostly illiquid, a long freeze on the bands is a real change even though nothing appears to happen in any given year.

AD Solicitors, a separate SRA-regulated law firm, has a guide to how the inheritance tax bands work, including the residence nil-rate band and how a married couple combine their allowances.

ATED, 1 April 2026 to 31 March 2027

The Annual Tax on Enveloped Dwellings is payable mainly by companies owning UK residential property valued over £500,000, and also catches partnerships with a corporate partner and collective investment schemes. Chargeable amounts for the year:

Reliefs can reduce the charge to nil for a buy-to-let company, but they are not automatic, so check the position for your company — see property companies and SPVs.

Property transaction taxes differ by nation

SDLT applies in England and Northern Ireland, Land Transaction Tax in Wales, and Land and Buildings Transaction Tax in Scotland, where the Additional Dwelling Supplement has been 8% for transactions on or after 5 December 2024. Never apply one nation's rates to another's property. The stamp duty calculator covers all three regimes.

What to do with this page

• Work out your qualifying income on gross rent, adding any self-employment turnover, and find which threshold year you land in.
• Model 2027/28 at the new property rates now, not in 2027. Two points on profits less two points on finance costs is a number you can compute today.
• If you hold through a company, look at extraction separately from ownership. Corporation tax and the April 2027 rates pull one way; the April 2026 dividend rates pull the other.
• If any property might be worth £2m or more, diarise March 2028. The surcharge falls on the owner.
• Put the four MTD dates in the calendar — 7 August, 7 November, 7 February and 7 May — alongside 31 January, and see the landlord tax calendar for the rest of the year.