UK Buy-to-Let Landlord Complete Guide 2026/27
Buy-to-let in England 2026/27: Section 24 mortgage interest, the 5% SDLT surcharge, the Renters' Rights Act, company ownership and CGT on a sale.
This guide is written for landlords in England. Income Tax figures use the England, Wales and Northern Ireland bands; the Renters' Rights Act reforms described here apply to England; SDLT applies in England and Northern Ireland, with LBTT in Scotland and LTT in Wales instead.
What has changed for buy-to-let
- Section 24 (phased in 2017/18 to 2020/21): mortgage interest replaced by a 20% tax reduction for individual landlords
- SDLT surcharge 5% (from 31 October 2024): up from 3% on additional residential property
- CGT on residential property: 18% and 24% in 2026/27, with a £3,000 annual exempt amount
- Renters' Rights Act 2025 (from 1 May 2026): section 21 abolished, periodic tenancies, one rent increase a year
Rental income tax for an individual landlord
- Add up the rent for the tax year
- Take off allowable expenses (agent fees, repairs, insurance and so on), but not mortgage interest
- The result is taxable rental profit, added to your other income
- Take a tax reduction of 20% of the lowest of finance costs, property profits and adjusted total income
Worked example, 2026/27, England: rent £18,000, expenses £4,000, mortgage interest £8,000, other income £60,000 (computed by our Section 24 calculator):
- Taxable rental profit: £18,000 - £4,000 = £14,000
- Income Tax on it at 40%: £5,600
- Less the finance cost reduction (20% of £8,000): -£1,600
- Tax on the letting: £4,000
- Cash left after costs, interest and tax: £2,000
The same letting through a company
- Profit after expenses and full interest: £6,000
- Corporation Tax at 19%: £1,140
- Left in the company: £4,860
- Paid out as a dividend to a higher-rate taxpayer (dividend allowance already used), taxed at 35.75%: £1,737, leaving £3,123
The company comes out ahead in this example whether or not the profit is paid out, but it brings company running costs, higher-rate SDLT on purchases, and usually dearer mortgages, which the example leaves out.
SDLT on an additional property (England and Northern Ireland)
| Property price | Standard SDLT | +5% surcharge | Total SDLT |
|---|---|---|---|
| £200,000 | £1,500 | £10,000 | £11,500 |
| £300,000 | £5,000 | £15,000 | £20,000 |
| £500,000 | £15,000 | £25,000 | £40,000 |
| £750,000 | £27,500 | £37,500 | £65,000 |
Computed by our SDLT calculator from the GOV.UK rates.
Renters' Rights Act 2025
Royal Assent 27 October 2025. Per the government's implementation roadmap, in England from 1 May 2026:
- Section 21 abolished: landlords need a valid section 8 ground to end a tenancy
- Assured periodic tenancies: most existing and new private tenancies; tenants can leave with two months' notice
- Rent increases: once a year and not in the first 12 months of a tenancy, by section 13 notice (Form 4A) with at least two months' notice; tenants can challenge an increase above the market rent
- Rental bidding banned, and no more than one month's rent in advance
- No discrimination against renters with children or on benefits
- Pets: landlords must consider a tenant's request and give valid reasons for refusing
Still to come: the private rented sector Database from late 2026, the Landlord Ombudsman (expected 2028), and the Decent Homes Standard and Awaab's Law for private renting, on dates not yet fixed (the Decent Homes consultation proposed 2035 or 2037). See our Renters' Rights Act guide.
CGT on selling a buy-to-let
2026/27: 18% within the basic-rate band, 24% above it, £3,000 annual exempt amount.
Worked example: bought for £180,000, sold for £280,000, seller already a higher-rate taxpayer, no other gains:
- Gain: £100,000 (before deducting buying and selling costs and improvements, which reduce it)
- After the annual exempt amount: £97,000
- CGT at 24%: £23,280
- Report and pay within 60 days of completion (GOV.UK)
Related pages
Frequently asked questions
Is buy-to-let still profitable?
It depends on the mortgage. In our worked example (rent £18,000, other costs £4,000, mortgage interest £8,000, landlord already a higher-rate taxpayer), the landlord keeps £2,000 a year after tax. Section 24 stops mortgage interest being deducted from rental profit, the 5% SDLT surcharge raises buying costs, and the Renters' Rights Act 2025 has changed how tenancies work in England.
What is Section 24?
Section 24 of the Finance (No. 2) Act 2015, phased in from 2017/18 to 2020/21, stops individual landlords deducting mortgage interest and other finance costs from residential rental profit. Instead they get a tax reduction at the 20% basic rate, on the lowest of their finance costs, their property profits and their adjusted total income. A higher-rate landlord therefore pays 40% on the profit before interest and gets only 20% of the interest back.
Should I own buy-to-let personally or through a company?
A company deducts mortgage interest in full and pays Corporation Tax (19% on profits up to £50,000, 25% above £250,000), but profits taken out as dividends are taxed again at 10.75%, 35.75% or 39.35%. Companies also pay the higher SDLT rates on residential purchases. The right answer depends on your tax band, borrowing and whether you will leave profits in the company.
What does the Renters' Rights Act 2025 change?
In England, from 1 May 2026: section 21 'no fault' evictions are abolished, most existing and new private tenancies are assured periodic tenancies, rent can only be increased once a year using the section 13 procedure with at least two months' notice, rental bidding and more than one month's rent in advance are banned, and landlords cannot discriminate against renters with children or on benefits. A landlord database follows from late 2026 and an Ombudsman is expected in 2028; the Decent Homes Standard for private renting is not yet in force.
What is the SDLT surcharge on buy-to-let?
In England and Northern Ireland, buying an additional residential property adds 5% to every SDLT band (raised from 3% on 31 October 2024). On a £250,000 buy-to-let that is £15,000 in total. The refund of the higher rates applies when you sell your previous main home within 3 years of buying a new main home, not to a buy-to-let purchase. Scotland and Wales have their own taxes.
What Capital Gains Tax do I pay when I sell a buy-to-let?
In 2026/27, 18% on gains within your unused basic-rate band and 24% above it, after the £3,000 annual exempt amount. Report and pay any tax due on UK residential property within 60 days of completion. Private Residence Relief covers periods it was your main home, plus the final 9 months.
How is rental profit calculated for tax?
Rent less allowable expenses: letting agent fees, accountants' fees, insurance, maintenance and repairs (not improvements), utility bills, ground rent and service charges, Council Tax and services you pay for, and other direct costs such as advertising. Improvements are not deductible against rent. Individual landlords get mortgage interest relief only as the basic-rate tax reduction; companies deduct it as an expense.
Can I use the Rent a Room Scheme for a buy-to-let?
No. The Rent a Room Scheme (up to £7,500 a year tax-free) is for letting furnished accommodation in your own home. For other lettings, gross property income of £1,000 or less is covered by the property allowance; above that you can deduct the £1,000 allowance instead of actual expenses.
What if I have not declared rental income?
HMRC lets you disclose unpaid tax on past rental income through the Let Property Campaign. Any penalty will be lower than if HMRC finds the income itself. You get a disclosure reference number and then have 3 months to work out and pay what you owe.
Should I move my existing portfolio into a company?
Transferring properties you own to a company you control is usually a disposal at market value for Capital Gains Tax, and the company pays SDLT on the market value. The mortgages normally have to be refinanced too. Get specialist advice before deciding.