Chancellor John Healey has announced another increase in property income tax in Labour’s 2026 Autumn Budget, taking the planned rates on taxable rental income to 24%, 44% and 49% from 6th April 2027.
The announcement on 28th October goes beyond the increase already set out in the 2025 Budget. Landlords who had budgeted for rates of 22%, 42% and 47% next April now face a further two percentage points, subject to the legislation completing its passage through Parliament.
I would check any rental investment figures prepared before this Budget. A purchase can look workable on the rent advertised and still leave considerably less after tax, borrowing costs and repairs. The number that matters to you is what remains once those costs have been allowed for.
What property income tax rates has Healey announced?
The Treasury’s accompanying tax legislation document confirms that the government intends to legislate through Finance Bill 2026-27. Its published property income tax rates for England, Wales and Northern Ireland are:
| Tax band | 2026/27 | Planned from April 2027 |
|---|---|---|
| Basic | 20% | 24% |
| Higher | 40% | 44% |
| Additional | 45% | 49% |
The comparison is supported by the government’s rates and allowances tables. Property income remains subject to the main income tax rates in 2026/27; separate property rates start next April.
Scotland has separate income tax arrangements. The Treasury also says that the Scottish and Welsh governments have powers to set property income rates in line with their existing income tax powers. Your taxpayer status and circumstances help determine the rates you pay.
For illustration, an extra two percentage points on £20,000 of taxable property income would add £400 before any reliefs or credits. The combined four-point increase over the current rates would add £800. That calculation isolates the rate change; it is not an estimate of every landlord’s bill.
A further squeeze after last year’s announcement
Explaining the property income tax increase, the Budget document describes asking people with taxable income from assets to contribute more as a “fair and proportionate approach”. It says the rates on earnings will remain unchanged.
Opening his Budget speech, Healey said: “This is a budget for the working people of Britain.” The words were reported in Sky News’ coverage of the statement.
The additional rise drew criticism from the lending industry. Tony Hall, head of business development at Saffron for Intermediaries, was quoted by Property Reporter in its Budget coverage: “Last year’s increase has yet to take effect, and the Chancellor has already doubled it.”
Hall warned that repeated tax changes make investment planning harder. For a landlord weighing up a purchase, that is a reason to revisit a long-term cashflow forecast rather than rely on a calculation made before the Budget.
More rental information for the taxman
Alongside the property income tax increase, HM Revenue and Customs (HMRC) has opened a consultation on property income reporting by letting agents and tenancy deposit protection schemes.
It proposes regular reporting obligations, replacing the need to issue individual notices each time. The proposed letting-agent rules focus on residential property in the United Kingdom (UK) let for UK-based landlords, including individuals, companies, partnerships and trusts. Responses are due by 20th January 2027; the detailed reporting requirements are still being consulted on.
For now, I would keep these two changes separate in your diary. The property income tax increase has a proposed start date next April. The reporting consultation is about how information will reach HMRC, with details still to follow.
If you own property personally, ask your accountant to revisit the figures using the proposed property income tax rates. If you hold it through a company, these personal income tax percentages are not a substitute for checking the company’s position. Changing ownership also deserves a proper assessment before you act.
If your rental plans include converting or subdividing a building, check the planning position alongside the tax figures. Our guide to change of use explains when permission may be needed.
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