Property income tax is going to 49%. That is four points, not two.
The Budget added a further two percentage points to property income tax from April 2027. Measured from where a landlord sits today, it is a four point rise in a single step.
The headline most outlets ran today is that property income tax rises by two percentage points. That is correct, and it understates what has happened.
Two points was already legislated at the last Budget. Today added two more on top. So the rates that take effect on 6 April 2027 are 24%, 44% and 49%. A landlord paying higher rate tax on rental profit today pays 40%. In eighteen months they pay 44%. That is four points, not two, and it arrives in one step.
What was announced
Legislation in the Finance Bill 2026-27 raises the rates charged on property income by a further two percentage points across all bands, from 6 April 2027. The rates become 24% basic, 44% higher and 49% additional. It applies in England, Wales and Northern Ireland. Scotland and Wales have been given the ability to set property income rates in line with their existing income tax powers.
The Office for Budget Responsibility scores the change at roughly £0.5bn a year from 2028-29. The National Residential Landlords Association has put an initial figure of £20 to £25 a month on a typical rental property, on the assumption that landlords pass what they can into rents.
The arithmetic on a real portfolio
Take £30,000 of taxable property profit after allowable costs, held by a higher rate taxpayer.
Because the rise is a flat four points from today in every band, the additional rate landlord on the same £30,000 profit sees the same £1,200. Scale it to a portfolio and the number stops being academic.
Limited companies are still untouched
This is a charge on property income held personally. Property held in a limited company pays corporation tax on its profits and is unaffected by today’s change. That gap has been widening for years and it just widened again.
Which does not make incorporation the automatic answer. Today’s Budget also halved Business Asset Disposal Relief, which changes what it costs to eventually get out of a company structure. The income case strengthened and the exit case weakened, in the same hour. We have written that up separately because it deserves the space.
Eighteen months is not as long as it sounds
April 2027 reads like plenty of time. It is not, if the answer involves moving finance.
Restructuring a portfolio means refinancing it. That is valuations across multiple properties, new facilities underwritten on company lending criteria rather than personal income, early repayment charges on anything still inside a fixed period, and legal work on each title. On a portfolio of any size that is a months-long exercise, and it has to complete before the rate change rather than start before it.
Add the point that everyone considering the same move is working to the same deadline. Lender capacity and solicitor capacity are finite. The files that complete comfortably will be the ones that started early.
What to actually do this month
This article is general information about the Budget and property finance. It is not tax advice. Rates and thresholds announced on Budget day can change as legislation passes. Speak to a qualified accountant or tax adviser about your own position.
“Four points off your rental profit is not a rounding error, but neither is the cost of restructuring to avoid it. The honest answer is that it depends on your numbers, and that the people who find out in January will have fewer options than the people who find out this week.”