UK Property Income 2027 Reform Calculator
From 6 April 2027 the UK introduces separate property income tax rates: 22% basic, 42% higher, 47% additional (Autumn Budget 2025, Finance Act 2026). Around 2.4 million landlords pay more tax. This calculator shows pre-reform vs post-reform tax across multiple landlord scenarios including Section 24 mortgage interest restriction stack.
New rates table
| Band | Pre-reform (current) | From 6 April 2027 | Change |
|---|---|---|---|
| Property basic rate | 20% | 22% | +2pp |
| Property higher rate | 40% | 42% | +2pp |
| Property additional rate | 45% | 47% | +2pp |
| Section 24 credit | 20% | 20% | UNCHANGED |
Worked scenarios - pre vs post-reform
| Scenario | Salary | Rental profit | Mortgage interest | Pre-reform total tax | Post-reform total tax | Increase |
|---|---|---|---|---|---|---|
| Basic-rate landlord, no salary | £0 | £18,000 | £8,000 | £2,000 | £2,360 | £360 |
| Basic-rate landlord with day job | £35,000 | £12,000 | £5,000 | £5,886 | £6,126 | £240 |
| Higher-rate landlord modest portfolio | £60,000 | £20,000 | £8,000 | £17,832 | £18,232 | £400 |
| Higher-rate landlord, larger portfolio | £70,000 | £35,000 | £18,000 | £25,832 | £26,532 | £700 |
| Additional-rate landlord, heavy leverage | £200,000 | £45,000 | £22,000 | £87,025 | £87,925 | £900 |
| Pure landlord (no salary), £80k rents, £30k mortgage | £0 | £50,000 | £30,000 | £6,460 | £7,460 | £1,000 |
Detailed breakdown - higher-rate landlord example
Higher-rate landlord, larger portfolio: Salary £70,000, Rental profit £35,000, Mortgage interest £18,000.
| Component | Pre-reform | Post-reform |
|---|---|---|
| Salary tax | £15,432 | £15,432 |
| Property tax before S24 credit | £14,000 | £14,700 |
| Section 24 credit (20% of mortgage interest) | -£3,600 | -£3,600 |
| Property tax after credit | £10,400 | £11,100 |
| Total tax | £25,832 | £26,532 |
Section 24 gap analysis under new rates
| Marginal property rate | S24 credit | Gap (cost per £1 interest) |
|---|---|---|
| 22% basic (new) | 20% | £0.02 |
| 42% higher (new) | 20% | £0.22 (was £0.20) |
| 47% additional (new) | 20% | £0.27 (was £0.25) |
Scope by jurisdiction
| Region | Subject to new rates? |
|---|---|
| England | Yes |
| Wales | Yes (WRIT mirrors Westminster) |
| Northern Ireland | Yes |
| Scotland | No - devolved bands apply |
Frequently asked questions
When do the new property income rates take effect?
6 April 2027 - announced Autumn Budget 26 November 2025, enacted Finance Act 2026 (Royal Assent 18 March 2026). Applies to England, Wales, Northern Ireland. Scottish landlords NOT affected - Scotland uses devolved bands.
What is the rate change?
+2 percentage points on each band: basic 20%→22%, higher 40%→42%, additional 45%→47%. Standard income tax rates (salary, self-employed, savings) unchanged at 20/40/45%.
Does Section 24 mortgage interest credit also change?
NO - S24 credit stays at 20% basic rate. This means the gap between effective rate + credit WIDENS: higher-rate landlord gap was 20pp (40-20), becomes 22pp (42-20). Additional rate gap was 25pp, becomes 27pp.
How is property income taxed when added to salary?
Property income is added to other income for band determination. Salary fills bands first (PA → basic → higher → additional). Property income fills remaining capacity. Different bands taxed at different property rates per the new regime.
Why are landlords being singled out for higher rates?
Government rationale: landlords don't pay National Insurance on rental income (unlike employed who pay Class 1 + Employer NI, or self-employed who pay Class 4). 2pp uplift brings effective burden closer to earned income. Around 2.4 million landlords affected.
What about furnished holiday lets (FHL)?
FHL regime abolished from 6 April 2025. Holiday lets are now standard property income - so subject to the new 22/42/47% rates from April 2027. Even worse - they also lost full mortgage interest deduction (now S24 restricted) + lost capital allowances on furniture + lost BADR on sale.
Are commercial property landlords affected?
NO - commercial property rental income remains subject to standard income tax rates (20/40/45%). The reform applies only to RESIDENTIAL property income. Mixed-use properties apportion income to commercial vs residential portions.
What planning should higher-rate landlords consider?
Options: (1) Incorporate - Ltd Co BTL pays CT 25% with full interest deduction. (2) Spousal income transfer - move beneficial ownership to lower-band spouse. (3) Deleveraging - pay down mortgages to reduce S24 exposure. (4) Sell marginal properties pre-reform. (5) Convert to commercial / mixed-use where possible.
Does the calculator account for Scottish landlords?
NO - Scottish landlords use devolved Scottish bands which were NOT changed by the Westminster reform. Scottish higher rate is already 42%, advanced 45%, top 48%. Effectively parity at most income levels but no specific property uplift.
What other tax changes affect landlords from 2026 onwards?
(1) MTD ITSA April 2026: digital records + quarterly updates if qualifying income above £50k. (2) BADR rate up to 18% April 2026: from 14%. (3) IHT on pensions April 2027: unused DC funds in estate. (4) Property income reform April 2027: this calculator. (5) MTD ITSA threshold drops to £30k April 2027, £20k April 2028: more landlords in scope.
Related
- Property income 2027 reform deep-dive guide
- Section 24 detailed guide
- UK landlord rental income tax
- Section 24 calculator
- Landlord tax guide
Sources + statute references
- https://www.gov.uk/government/publications/income-tax-changes-to-tax-rates-for-property-savings-and-dividend-income
- https://commonslibrary.parliament.uk/research-briefings/cbp-10450/
- https://www.legislation.gov.uk/ukpga/1994/23/section/50A
Data retrieved 2026-06-06. Finance Act 2026 Royal Assent 18 March 2026, commencement 6 April 2027.