The 2025 Budget announced higher tax on property income from April 2027. On 28 October 2026, the Chancellor announced another rise of two percentage points.
HMRC's updated proposals now put the rates at 24%, 44%, and 49%, subject to legislation.
For landlords who own rental property personally, the proposed rates could mean less rental income after tax.
If you are planning your first buy-to-let purchase, here is what to check before you commit, from rental returns to financing.
What changed in the Autumn Budget for landlords?
The proposed rates would apply from 6 April 2027 to landlords receiving rental income as individuals. They do not describe the tax bill of a limited company.
The table separates the rates in use now, the earlier plans and the latest proposal. Both future columns refer to the 2027/28 tax year.
Sources: current income-tax rates, the 2025 technical note and HMRC's 2026 proposals.
This Budget adds two percentage points to the earlier plan, taking the proposed rates four points above today's rates. Your current tax bill does not change immediately.
The announced property rates cover England and Wales, subject to devolved powers.
How could higher landlord tax affect your rental income?
Higher tax could leave you with less rental income even if the rent and running costs stay the same. Allow for that when checking a buy-to-let investment.
For a hypothetical example, say you personally own a mortgage-free rental property in England. Assume all its taxable rental profit falls within the higher-rate band, with no unused allowances, other reliefs or overseas tax effects.
Under these assumptions, £480 less remains each year.
The £480 compares current rates with the proposed April 2027 rates. It includes both the earlier planned increase and this Budget's extra two percentage points. It is a mortgage-free example, so it includes no mortgage-interest relief.
What changes if you have a mortgage?
Mortgage-interest relief is also set to rise. The Treasury's policy costings keep relief aligned with the property basic rate. Under the proposal, that means 24% from April 2027, compared with 20% now.
For individual residential landlords, qualifying interest reduces the tax bill. It cannot be deducted as a running expense when calculating taxable rental profit.
The reduction is limited by eligible finance costs, property profits, and adjusted total income above the Personal Allowance. It cannot create a tax refund.
To see the difference, add £6,000 of eligible annual mortgage interest to the same example. Assume the full relief can be used in both years. The tax reduction would rise from £1,200 to £1,440, offsetting £240 of the £480 tax increase.
That still leaves £240 more tax to pay each year. A higher relief rate can soften the increase, but borrowing heavily does not automatically remove it. Ask a tax adviser to calculate the relief you can use.
How should you check your first buy-to-let purchase?
Start with the rent and running costs. Then work through your tax position and how you will fund the purchase.
What rent and running costs should you use?
Look at rents for similar properties nearby and ask a letting agent what you could realistically expect. Allow for these ongoing costs:
- Letting and management fees
- Landlord insurance
- Maintenance and repairs
- Service charges, where applicable
- Costs during periods without tenants
Budget separately for the purchase itself, including legal fees, any purchase tax, and the costs of arranging finance.
Alongside rental yield, check what would actually come in and go out each month.
Set aside cash for an empty period or an unexpected repair before you buy. Then check whether the rent left after tax would let you rebuild that reserve after using it.
What should you ask a tax adviser?
Take your expected rent, running costs, and borrowing plans to a tax adviser. Ask what you would keep after tax, based on your income, ownership structure, and tax residence.
If you are weighing up personal and company ownership, ask the adviser to compare the full costs. The personal income-tax rates in this guide do not describe a company's tax bill.
If you live overseas, ask how the UK tax treatment fits with the rules where you live. Do not assume that another investor's allowance or tax rate applies to you.
Put that estimate into your purchase budget. You can then see what would be left for ongoing costs and a cash reserve.
What should you confirm with your lender?
Check that your finance can be ready before the completion deadline. Ask for a current quote and include all fees in your purchase budget.
If a mortgage cannot be ready in time, a bridging loan may cover the short-term funding gap. Include its additional interest and fees, and ask what happens if repayment takes longer than planned.
If you plan to repay the bridge by refinancing onto a buy-to-let mortgage, check whether a lender could accept you and the property. A future mortgage remains subject to its checks and approval. Your repayment plan needs to work within the loan term.
Should you delay a purchase after the Budget?
If you are still waiting for a tax estimate or a financing decision, take time to resolve those gaps. Your decision comes down to whether the property's numbers and funding work for you.
Use realistic rent, a current finance quote and an allowance for unexpected costs when you review the purchase. If the money left is too low for your plans, reconsider the price or the purchase.
If you already have a contractual deadline, speak to your solicitor and lender promptly about what you can do. Do not assume you can move the completion date while you wait.
What should you do now?
Start by checking whether the property’s numbers still work for you after the tax changes. Our rental-yield guide helps you work through expected rent and running costs, giving you a starting point before you factor in borrowing costs and your own tax bill.
If you are comparing finance, read our bridging loan vs mortgage guide. For short-term funding around a completion deadline, check our bridging-loan cost guide alongside our exit strategy guide to budget for borrowing and plan repayment.
Key takeaways
- The proposed property-income tax rates for individual landlords are 24%, 44% and 49% from 6 April 2027.
- This Budget adds two percentage points to the rates previously planned for April 2027.
- Judge the purchase using the rent left after running costs, borrowing costs and tax.
- Keep a cash reserve for empty periods and unexpected repairs.
- Check that your financing can be ready before the completion deadline.
- Mortgage-interest relief is intended to rise to 24%, but the amount you can use depends on the relief limits.
Frequently asked questions
1. Did the Autumn Budget 2026 change stamp duty?
The main residential purchase rates and additional-property surcharge stayed unchanged in England. Some technical relief rules changed.
2. How much will landlord tax go up?
The proposed rates are 24%, 44%, and 49% from 6 April 2027. That is two percentage points above the earlier plans and four above current rates.
3. Will higher mortgage-interest relief cancel the tax rise?
Not automatically. Relief is intended to rise to 24%, but limits apply. The result depends on your rental profit, qualifying interest, and wider tax position.
4. Does the Budget affect limited company landlords?
The personal rental-income tax rise does not apply to company profits. Companies pay Corporation Tax; other Budget measures may still affect them.
5. Does living overseas exempt me from UK tax on rent?
No. UK rental income can still be taxable when you live abroad. Your bill depends on your income, allowances, and circumstances.
