If you let property, the next few tax years bring more change than most landlords have seen in a decade. Here is what is happening and what to do about it.
Making Tax Digital applies to rental income
MTD for Income Tax covers landlords as well as sole traders. It started on 6 April 2026 for people with qualifying income over £50,000 and extends to over £30,000 from April 2027 and over £20,000 from April 2028. Qualifying income is gross rent plus any self-employment income — before expenses. If you own property jointly, you count your share.
Once you’re in, you keep digital records, send quarterly updates and file a final declaration after the year end.
New property income tax rates from April 2027
From April 2027, property income will be taxed at its own rates: 22% basic, 42% higher and 47% additional — two percentage points above the standard Income Tax rates. For many landlords, that means a higher bill on the same rent.
Steps worth taking now
- Check your qualifying income and whether you are already inside MTD.
- Separate rental money from personal money with a dedicated bank account.
- Review how property is owned. Ownership between spouses, or through a company, changes who pays tax and at what rate — but moving property can trigger Capital Gains Tax and Stamp Duty Land Tax, so get advice first.
- Keep a full record of finance costs, repairs and letting fees; none of it helps if you can’t prove it.
- If your rental income is small, the £1,000 property allowance may be simpler than claiming expenses.
How we help
We look after landlords’ records, quarterly updates and returns, and model the effect of the 2027 rate changes on your portfolio so you can plan rather than react.
This article is general guidance based on the rules for the 2026/27 tax year. It isn’t personal advice — talk to us before you act on it.
