Autumn Budget 2026: BTL Landlord Tax Rise Explained

Q: When does the new property income tax rate actually take effect?

The increase applies from April 2027, not immediately. The 2026/27 tax year still uses the rates set after the 2025 Budget (22%/42%/47%).

Q: Did the Budget change Stamp Duty or Capital Gains Tax for landlords?

Neither was touched on 28 October. The additional dwelling stamp duty surcharge and current Capital Gains Tax rates on property stay as they were, though both remain areas worth watching.

Q: Will this affect buy-to-let mortgage affordability calculations?

Not directly. Lender stress tests are based on rental income cover, not your personal tax rate. A higher tax bill does shrink the profit buffer you have if rates rise further, though, so it is worth running your numbers through a buy-to-let mortgage calculator before a new purchase or remortgage.

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The New Rate Does Not Start Until April 2027 — But It Is the Second Rise in Two Budgets

Chancellor John Healey’s first Budget, delivered on 28 October 2026, added a further two percentage points to the tax rate on property and savings income — on top of the two-point rise already announced in last year’s Budget. From April 2027, that takes the basic, higher and additional rates on rental income to 24%, 44% and 49% respectively, up from the pre-2025 starting point of 20%, 40% and 45%.

For landlords already managing tighter margins, tougher stress tests and rising compliance costs, this is another direct hit to the return on a buy-to-let property. Here is what actually changed, what it means in practice, and what is worth reviewing before April 2027.

What Changed on 28 October

The government’s own Budget report described the increase as a “fair and proportionate approach” that would not affect the majority of income taxpayers. For landlords, though, the effect is specific and cumulative: this is the second two-point rise on property income in two consecutive Budgets, stacking directly onto the existing restriction on mortgage interest relief for individually-owned properties.

The Office for Budget Responsibility was blunter, warning of a “material reduction in return to private landlords” after a decade of measures that have already squeezed yields. Its bigger worry is the knock-on effect: fewer new landlords entering the market, some existing ones selling up, and the properties that stay let seeing rents pushed higher as costs get passed down to tenants.

What It Costs in Practice

How much this bites depends on your income band and how your rental profit is structured, but every landlord taxed on rental income as an individual moves the same way under the new rate.

Illustrative example only, not a substitute for professional tax advice: a higher-rate taxpayer with £15,000 of net rental profit a year currently pays 42% on that income (the post-2025-Budget higher rate), a liability of £6,300. Once the new 44% rate lands in April 2027, that climbs to £6,600 — an extra £300 a year on that level of profit alone, before accounting for how mortgage interest relief is treated separately under the existing Section 24 rules. Run your own numbers through our buy-to-let mortgage calculator to see how the new rate affects your net return.

Landlords reviewing buy-to-let portfolio figures on a laptop at a kitchen table

What Did Not Change

Not every rumoured measure made it into this Budget. The additional dwelling stamp duty surcharge was not altered on 28 October, and there was no change to the current Capital Gains Tax rates or annual exempt amount for landlords selling a buy-to-let property. Worth noting, though, that none of these are off the table permanently — the pattern of recent Budgets has been incremental tightening of landlord taxation year on year, not a single decisive change.

What Landlords Should Be Reviewing Now

The new rate does not bite until April 2027, which gives landlords roughly five months to think through a question several brokers raised in the days after the Budget: once this rise stacks on top of last year’s, does holding property personally still make financial sense for a larger portfolio, or is it time to look seriously at a limited company structure?

Structuring ownership is a decision for an accountant, not a broker — they can weigh it against your actual numbers rather than a rule of thumb that will not fit every landlord. A broker’s role sits downstream of that call: finding the right buy-to-let mortgage whether you end up owning personally or through a company, and timing a remortgage so it reflects the tax position you will actually be under, not the one that applied last year.

Frequently Asked Questions

When does the new property income tax rate actually take effect?

The increase applies from April 2027, not immediately. The 2026/27 tax year still uses the rates set after the 2025 Budget (22%/42%/47%).

Does this affect landlords who own property through a limited company?

No — this change applies to property income taxed under personal Income Tax rules. Landlords holding property through a limited company pay Corporation Tax on rental profit instead, which is why several brokers expect more landlords to review their ownership structure before April 2027.

Did the Budget change Stamp Duty or Capital Gains Tax for landlords?

Neither was touched on 28 October. The additional dwelling stamp duty surcharge and current Capital Gains Tax rates on property stay as they were, though both remain areas worth watching.

Should I remortgage before the new rate takes effect?

There is no mortgage-pricing reason to rush a remortgage purely because of this tax change. But if a structure or portfolio review is already on your list before the rate change lands, fold the remortgage conversation into that rather than treating them separately — one call to a broker, one to an accountant.

Will this affect buy-to-let mortgage affordability calculations?

Not directly. Lender stress tests are based on rental income cover, not your personal tax rate. A higher tax bill does shrink the profit buffer you have if rates rise further, though, so it is worth running your numbers through a buy-to-let mortgage calculator before a new purchase or remortgage.

Does the increase apply to furnished holiday lets?

Yes, in the same way as any other individually-owned rental property. Furnished Holiday Letting tax treatment was aligned with standard property income rules from April 2025, so FHL landlords move onto the new rate from April 2027 alongside everyone else.