From 6 April 2027, the way rental income is taxed in the UK is changing significantly. Property income will move onto its own set of income tax rates - 22%, 42% and 47% - separate from the rates that apply to employment, pension and trading income, which remain at 20%, 40% and 45%.
On top of the rate change, the order in which the personal allowance is applied is also changing. From April 2027, the allowance will be set against employment, pension and trading income first, and only then against any remaining property income. For landlords who also have a job or pension, this can mean losing some or all of the personal allowance against their rental profits - pushing more of that income into taxable territory than under the current rules.
Together, these are the most significant changes to land on UK landlords in years - arguably bigger than Section 24 was in 2020 - and almost no online calculator currently models both changes side by side. This guide breaks down exactly what's changing, who is affected, by how much, and what landlords can realistically do about it before the rules take effect.
The full guide will cover: