The Chancellor announced several tax changes in the Budget on 28 October 2026. Unfortunately, these are not good news for landlords.
Published 31st October 2026
The Chancellor announced several tax changes in the Autumn Budget on 28th October 2026. Unfortunately, these are not good news for landlords. The changes include higher tax rates on property income, a new order for calculating tax where someone has different types of income, and more frequent tax payments for some taxpayers from 2029.
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Income tax rates on property income
From 6th April 2027, the income tax rates on property income will increase:
- Basic rate: 24%, up from 20%
- Higher rate: 44%, up from 40%
- Additional rate: 49%, up from 45%
The income tax bands and standard Personal Allowance are not changing. These property income rates apply in England, Wales and Northern Ireland. Scotland’s position may differ because property income rates are devolved.
Rates on savings income will also increase from 6th April 2027, to 24%, 44% and 49% at the basic, higher and additional rates respectively.
For many of our non-resident landlords, the increase in UK tax may not increase the total tax they pay on their rental income. If their country of residence allows UK tax to be credited against local tax on the same income, the higher UK tax bill may be offset against their local tax bill. This depends on the rules in that country and any relevant tax treaty, and the credit may be limited to the local tax due on that income.
How different types of income will be taxed
From 6th April 2027, income will be taken into account in this order when calculating income tax:
- Income that is not property, savings or dividend income (this will include: salary, pension or trading income); then
- Property income; then
- Savings income; then
- Dividend income
This order matters because property and savings income will have their own tax rates.
For people entitled to the Personal Allowance, income between £100,000 and £125,140 can be subject to an effective marginal tax rate of 66% when it is property or savings income. This is because the Personal Allowance is reduced by £1 for every £2 of income above £100,000. For example, an additional £1 of property income in this range may be taxed at 44% and also reduce the Personal Allowance, increasing the overall tax on that £1.
More regular tax payments
From April 2029, taxpayers who currently have to make payments on account will be required to make smaller, more regular payments during the tax year, instead of making two payments in January and July.
The payments are expected to be automated, for example by Direct Debit, where possible. People with enough PAYE income from employment or a private pension will be able to choose to pay through PAYE. The Government has not yet decided how often the payments will be made. The change affects when tax is paid, not the total tax due, and taxpayers will still need to file their tax returns.
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The information contained in this article is believed to be correct at the time of publication. The content of this article is intended to be a brief summary of the principal points of the legislation or proposed legislation only, and it is provided for general guidance only. It may not take into account subsequent changes in the law and of necessity it omits much detail. Taxation is a complicated subject and is subject to change. You should only rely on advice prepared specifically for you. Neither the writer nor Landlords Tax Services Ltd can be held liable for any loss arising from any act or omission by you as a result of your understanding of this article. If the subject matter is of interest you should contact us to see if there is a relevant update, and to take professional advice which takes into account your circumstances.