Higher Property Income Tax: What Does It Mean for Landlords?

The Government has announced plans to increase income tax on rental profits by 2 percentage points from April 2027, adding further pressure on private landlords.

Under the proposals, the rates of income tax on property income will increase as follows:

• Basic rate: 24%
• Higher rate: 44%
• Additional rate: 49%

Importantly, the additional tax applies to rental profits after allowable expenses, rather than gross rental income. For example, a higher-rate taxpayer making £30,000 a year in taxable rental profits would pay an additional £600 per annum.

Landlords with mortgages may feel the impact more acutely, as mortgage interest cannot generally be deducted in full when calculating taxable residential rental profits.

Properties held through limited companies will not be directly affected, although different tax considerations apply.

For landlords, this is another reason to review the overall performance of their property investments. At Dutch & Dutch, we have been advising landlords across North West London for over 125 years.

If you would like to discuss your rental property or portfolio, please contact our team on 020 7443 9860.