---
title: Landlords Face a 2% Rise in Property Income Tax and Quarterly HMRC Reporting From April 2027
description: From April 2027 property income tax rises to 22%, 42% and 47% and Making Tax Digital reaches landlords earning over £30,000. What to plan for now.
author: Dr Marina Nani (Editor-in-Chief)
date: 2026-10-22T13:35:45.168Z
updated: 2026-10-22T15:14:31.213Z
canonical: https://www.richmanmagazine.com/article/landlord-tax-2027-property-income-tax-making-tax-digital
image: https://cdn.nanimediahouse.com/pexels-9828297.webp
categories: Money & Legacy, Real Estate
content_type: Analysis
region: United Kingdom
publication: Rich Dad Magazine
schema_type: Article
---
If you let property in your own name in England, Wales or Northern Ireland, 6 April 2027 brings two changes on the same day. The tax rates on your rental profits rise by two percentage points, and Making Tax Digital reaches every landlord whose qualifying income is above £30,000. Before either arrives, Chancellor John Healey delivers his first Budget on Wednesday 28 October 2026, and it could add more.
## Property income tax rises to 22%, 42% and 47%
The November 2025 Budget created separate income tax rates for property income. From April 2027, rental profits are taxed at 22% for basic rate taxpayers, 42% at the higher rate and 47% at the additional rate, two points above the rates on earnings from a job. Scotland sets its own income tax rates and is outside the change.
*Photo: Photo: Mikhail Nilov / Pexels*
In pounds, every £10,000 of taxable rental profit costs a basic rate landlord £2,200 a year instead of £2,000, and a higher rate landlord £4,200 instead of £4,000. If your profits run to £40,000, a higher rate bill rises by £800 a year with no change in rent, occupancy or costs.
Mortgage interest is treated slightly differently. Since 2020, individual landlords cannot deduct finance costs from rental income and receive a tax credit worth 20% of those costs instead. The government has set out that this credit will be given at the new 22% property basic rate from April 2027, which softens the increase for leveraged landlords but does not cancel it for anyone paying tax at 42% or 47%.
## Limited company landlords already pay more on dividends
If your portfolio sits inside a company, the increase reached you a year earlier. Since April 2026, dividends have been taxed at 10.75% at the ordinary rate and 35.75% at the upper rate, each two points higher than before. Profits still pay corporation tax inside the company, so any money you draw out as dividends now carries a heavier combined charge.
## Frozen thresholds pull more rent into the higher band
Income tax thresholds are frozen until April 2031. As rents rise and the bands stay still, more of your rental profit crosses into the 42% band each year. A landlord earning a salary close to the higher rate threshold can find that a rent increase of a few hundred pounds is taxed at the new 42% property rate.
## Making Tax Digital reaches landlords with income over £30,000
Making Tax Digital for Income Tax has applied since 6 April 2026 to landlords and sole traders with qualifying income above £50,000. From 6 April 2027, the threshold falls to £30,000, based on your income for the 2025 to 2026 tax year, and in April 2028 it falls again to £20,000.
*Photo: Photo: Mikhail Nilov / Pexels*
Qualifying income means gross rent and any self-employment turnover before expenses, not profit. A landlord collecting £2,600 a month in rent passes the £30,000 line even if mortgage interest and repairs leave a modest profit. If you own property jointly, you count your own share of the rent.
Under the system, you keep digital records in HMRC-recognised software and send a summary of income and expenses every quarter, followed by a final declaration after the tax year ends. The quarterly updates are not tax returns and do not change when you pay. Penalty points for late quarterly updates were waived in the first year, but they apply from the 2027 to 2028 tax year, so new entrants next April join the system with penalties already live.
## The Renters' Rights Act has raised running costs since May
Since 1 May 2026, Section 21 no-fault evictions have been abolished for private landlords in England, and every assured shorthold tenancy has converted into a periodic assured tenancy. Possession now depends on a Section 8 ground, rent increases go through a Section 13 notice and you can no longer accept bids above the advertised rent. Each change adds time, paperwork or professional fees to running a portfolio, and those costs sit alongside the tax rises rather than replacing them.
*Photo: Photo: RDNE Stock project / Pexels*
## What Healey's first Budget can still change
Prime Minister Andy Burnham has committed his government to Labour's 2024 manifesto pledges not to raise income tax, VAT or national insurance, and to the party's fiscal rules on borrowing. The higher property income rates were announced before he took office and remain due to start in April 2027 unless the Budget changes them.
Speculation before 28 October has centred on [capital gains tax and stamp duty](https://richdadmagazine.com/article/your-home-after-the-budget), which matter most if you plan to sell or buy. None of it is confirmed, and the detail you need will sit in the Budget documents and the Office for Budget Responsibility forecast published as Healey sits down.
## Five things you can do before April 2027
You can rebuild your cash flow for each property using 22%, 42% or 47% on profit and your current or next fixed mortgage rate, so that you see the real margin before the new rates arrive.
You can check your 2025 to 2026 gross rental and self-employment income against the £30,000 threshold, and choose your Making Tax Digital software now rather than in March.
You can move your records into a digital format this winter, so that your first quarterly update draws on numbers you already trust.
You can ask a qualified tax adviser whether your ownership structure still suits you, as personal ownership and a limited company now carry different rates, reliefs and costs of moving between them.
You can set aside the cost of compliance, from software subscriptions to accountancy fees, as a fixed line in each property's budget.
## Where to hear the Budget verdict on the day
The National Landlord Investment Show closes its 2026 season at Old Billingsgate in London on 28 October, the day of the Budget. Its panel, 'The 2026 Autumn Budget Debrief: How Much Damage Has It Done to Landlords and Property Investors?', meets straight after the Chancellor's statement to explain what has changed for landlords and investors. Other sessions cover landlord taxation, Making Tax Digital, property finance and protecting portfolio profitability. Tickets are free and spaces are limited.
This article is general information and not tax advice. Rates and thresholds can change in the Budget, so check the details with a qualified adviser before you act.