The Budget on Wednesday did one thing to landlords, and it is worth being precise about it, because the headlines have blurred two separate rises into one.
Last year's Budget created a separate set of income tax rates for rental profit, two points above the ordinary rates, starting in April 2027. That was already law: 22%, 42% and 47%. On Wednesday the Chancellor added another two points on top. So from 6 April 2027, rental profit for a landlord who owns in their own name will be taxed at 24% at the basic rate, 44% at the higher rate and 49% at the top. Savings interest gets the same treatment. Earned income does not move.
That applies in England, Wales and Northern Ireland. Scotland and Wales have been given the power to set their own property rates, so if you let north of the border, watch for a separate announcement.
The government's own numbers say about 2.4 million landlords are caught, and that the average extra bill in the first year is £225. Averages hide a lot, so here is the version that matters to you.
What it costs per let. The arithmetic is the same at every band. Four points on taxable rental profit is £400 for every £10,000 of profit, whether you pay basic, higher or additional rate. Two of those points you already knew about. The other two arrived on Wednesday.
Two things make that number bigger than it looks. First, since 2020, mortgage interest has not been a deductible cost for landlords who own personally. You get a tax credit for it instead, so the new rates are charged on rent after running costs but before the mortgage. A landlord whose loan eats most of the rent is paying the new rate on money they never see. Second, a rise in your taxable profit can push you from basic to higher rate, and the step from 24% to 44% is a long one.
The one piece of good news. Buried at paragraph 1.61 of the Budget's tax overview: stamp duty has been removed from rent paid under assured tenancies, backdated to 1 May 2026. This mattered more than most people realised. Under the old rule, a long-running tenancy could creep over the stamp duty threshold on the cumulative rent, and strictly a return was due. With every tenancy now periodic and open-ended, that was going to catch a lot of ordinary lets. It will not now, and you do not need to file anything for it.
Two things that did not happen. No change was announced to capital gains tax on selling a rental, so the sums on an exit are what they were last week. And nothing new on the Renters' Rights Act, which continues on its own timetable.
One thing for the top end. From April 2028 a council tax surcharge lands on homes worth £2 million or more: £2,500 a year at the bottom band, rising to £7,500 above £5 million, paid by the owner, not the occupier. If you let anything in that bracket, the tenant will not be paying it. You will.
So what would I do between now and April 2027? Three things, none of them dramatic.
Work out your taxable rental profit per property, before the mortgage, using last year's figures. Then multiply by four per cent. That is the extra cost of Wednesday plus last year, per let, per year. Write it down.
Check which band that profit puts you in for 2027, with any pay rise or other income added. The jump from 24% to 44% is where the real money is, and a small pension contribution or a change in who holds the property between a couple can keep a profit below the line. Talk to your accountant before April, not after.
Do not incorporate because of a Budget. A company pays corporation tax at 19% or 25% on rental profit, which looks tempting next to 44%. But moving properties you already own into a company usually means stamp duty on the transfer, capital gains tax on the paper gain, and a new mortgage at a higher rate. For some portfolios it pays. For most small ones it does not. The sums have to be done property by property, with the costs of getting there included.
From my own portfolio: one of my rooms lets at £800 a month, which is £9,600 a year. Take off the running costs and a share of the bills and the taxable profit on that room is somewhere around £6,000. Four points on that is £240 a year. On its own, that is a boiler service and a half. The reason I did the sum room by room is that this is how the rise actually arrives: not as one headline figure but as a couple of hundred pounds attached to every door you let, every year. Multiply it by your own number of doors and it is a rent rise's worth. I would rather know that figure this week than meet it in a tax bill in January 2029.
The temptation is to shrug, because April 2027 is seventeen months away and the first bill under these rates is not due until January 2029. I would not. The year that sets those bills starts in April, and every decision about rent, repairs and who owns what is made before then.
The takeaway: from 6 April 2027 rental profit is taxed at 24%, 44% or 49% if you own in your own name, two points higher than the rise you already knew about. It costs £400 a year for every £10,000 of taxable profit, charged before the mortgage. Stamp duty on rent is gone, capital gains tax is unchanged, and homes over £2 million get a council tax surcharge from 2028. Do the per-property sum now, check your band, and do not rush into a company.
I am a landlord, not a tax adviser, so take advice on your own numbers. And if you know a landlord who thinks Wednesday's rise was the same two points they heard about last year, send them this. It is not. It is four.