UK Property Income Tax Rates 2027/28 — 22%, 42% & 47%

From 6 April 2027, the UK has separate Income Tax rates for property income in the 2027/28 tax year: 22% property basic rate, 42% property higher rate and 47% property additional rate. These rates apply to the relevant property income after the normal property-profit calculation and the ordering rules have been applied.

This is not a flat 22% tax on rent and it does not replace the rules for allowable expenses, property losses, the property allowance or residential finance-cost relief. Your actual bill depends on your taxable property profit, other income, allowances, losses, residence and the rate system that applies to you. Use the Property Income Calculator→ for an estimate, then check the final HMRC return rules for your circumstances.

What are the UK property income tax rates in 2027/28?

The rates set by Finance Act 2026 are:

The legislation makes property income a separate income category for the rate calculation. The rates are intended for income that would otherwise fall into the basic, higher or additional rate bands. They do not mean that every landlord pays one rate on every pound of rent.

For comparison, the main Income Tax rates for non-savings, non-dividend income in 2026/27 are 20%, 40% and 45%. The 2027/28 property rates are therefore two percentage points higher at each corresponding band, but the way the income is calculated and the taxpayer's available allowances still matter.

Which income is treated as property income?

Property income generally includes profits from letting land or buildings and certain property income distributions. The new rate category does not turn a capital gain into rental income, and it does not change the separate rules for employment income, dividends or savings interest.

Common examples include:

• rent from a residential buy-to-let property;
• rent from commercial property or land;
• income from more than one property business;
• certain property income distributions; and
• qualifying overseas property income that is chargeable to UK Income Tax.

The starting point is the gross receipts. You then work out the property business profit using the relevant property rules. Day-to-day expenses such as letting-agent fees, insurance, repairs and certain professional costs may be allowable, while capital improvements are treated differently. Do not multiply gross rent by 22%, 42% or 47% before making that calculation.

How the tax calculation works

An illustrative calculation for an England-based individual might look like this:

The £5,500 figure is not a personal tax bill. It assumes the entire £25,000 sits in the property basic-rate band, ignores personal allowance interactions and assumes no losses, finance-cost reducer or other income. A landlord with salary, pension income or savings may reach a different property band because the income streams interact in the tax calculation.

The useful planning sequence is:

1. total the relevant property receipts;
2. subtract allowable expenses and apply the property-loss rules;
3. calculate the effect of residential finance costs separately;
4. combine the result with the rest of the Income Tax calculation; and
5. apply the property rates to the relevant part of the taxable income.

What happens to mortgage interest and finance costs?

For an individual landlord with residential finance costs, mortgage interest is not normally deducted as an ordinary expense when calculating the property business profit. Instead, the landlord receives a tax reduction under the finance-cost rules.

HMRC's technical note says this mechanism continues under the new property rates. For 2027/28, the relevant property basic rate for the tax reduction is 22%. This is a change to the rate used for the reducer; it is not permission to deduct the full mortgage interest from rent.

For example, if an individual has £8,000 of eligible residential finance costs, a simplified 22% reducer would be £1,760 before considering the statutory limits and the rest of the tax calculation. That is an illustration of the rate only, not a claim that every £8,000 payment produces a £1,760 repayment or that the reducer can create a cash refund.

Companies have different rules for finance costs and Corporation Tax. Do not apply this individual-landlord explanation to a company-owned property without checking the company calculation.

Does the £1,000 property allowance change?

No. The property allowance remains a separate £1,000 allowance for qualifying property income. It is not increased to match the new property rates.

HMRC says that where gross property income is £1,000 or less, a person will generally not need to tell HMRC about that income unless an exception applies. Where property income is higher, the income must be declared through the relevant process. If you use the property allowance, you cannot also deduct actual expenses for the same income.

The allowance is not the same as Rent-a-Room relief. Rent-a-Room has its own conditions and limit for furnished accommodation in your only or main home. Do not apply both allowances to the same room income.

What happens to property losses?

The new rates do not erase carried-forward property losses. HMRC's technical note says carried-forward property losses must still be set against property income. Keep a clear record of which property business generated the loss and how it is used.

Losses can make a large difference to the taxable property profit. A landlord with £25,000 of current-year profit and £10,000 of allowable carried-forward losses may not be calculating tax on £25,000, subject to the detailed rules. The correct result depends on the type of loss, the property business and the way the loss is claimed.

Do not use a loss to reduce employment income merely because property rates are changing. Property-loss relief has its own ordering and carry-forward rules.

England, Wales, Northern Ireland and Scotland

The statutory framework distinguishes the UK nations. The published measure applies to England, Wales and Northern Ireland, while Finance Act 2026 provides for separate devolved powers concerning Scottish and Welsh property rates.

That means a UK-wide headline can be misleading. Before using the rates in a calculator, confirm:

• where you are resident for Income Tax purposes;
• whether Scottish Income Tax rules apply;
• whether Welsh property rates have been set for the relevant year; and
• whether the income is personal property income or company income.

Do not silently use the England-and-Northern-Ireland figure for a Scottish taxpayer. The calculation needs a country-specific branch when devolved rates apply.

What landlords should prepare for 2027/28

Frequently Asked Questions

Evidence and decision checks

A reliable property income tax rates 2027 28 review starts by fixing the tax year and the date on which the relevant event happened. Record the person's or business's status, the income or transaction category, the amount before tax, tax already withheld, and any election or claim being relied on. Do not combine a headline figure with a final liability: the result can change when another income source, a payment date, an ownership interest or a qualifying condition is added.

Keep the source documents behind every important input. Depending on the subject, that may include payslips, invoices, bank statements, contracts, provider statements, travel records, HMRC notices, payroll submissions, valuations or correspondence. Where an amount is apportioned, write down the method and retain the underlying total. If a correction is made, preserve the original figure and explain the reason, date and evidence for the replacement.

Before relying on the result, check the current official guidance for the same tax year and jurisdiction. Distinguish enacted law from a consultation, draft measure, announcement or future proposal, and record the effective date. Reconcile the final estimate to the relevant return, payroll record or HMRC account. A calculator or explanatory guide can support a decision, but it cannot replace the eligibility test or the official filing and payment process.

Evidence and decision checks

A reliable property income tax rates 2027 28 review starts by fixing the tax year and the date on which the relevant event happened. Record the person's or business's status, the income or transaction category, the amount before tax, tax already withheld, and any election or claim being relied on. Do not combine a headline figure with a final liability: the result can change when another income source, a payment date, an ownership interest or a qualifying condition is added.

Keep the source documents behind every important input. Depending on the subject, that may include payslips, invoices, bank statements, contracts, provider statements, travel records, HMRC notices, payroll submissions, valuations or correspondence. Where an amount is apportioned, write down the method and retain the underlying total. If a correction is made, preserve the original figure and explain the reason, date and evidence for the replacement.

Before relying on the result, check the current official guidance for the same tax year and jurisdiction. Distinguish enacted law from a consultation, draft measure, announcement or future proposal, and record the effective date. Reconcile the final estimate to the relevant return, payroll record or HMRC account. A calculator or explanatory guide can support a decision, but it cannot replace the eligibility test or the official filing and payment process.

Applying the 2027/28 property rates correctly

Start with property profit, not gross rent. Reconcile receipts, allowable expenses, property losses, finance costs, jointly owned income and any property allowance decision before applying the published rates. Residential finance costs for individuals may produce a tax reduction rather than an ordinary deduction, so do not subtract mortgage interest from rent without checking the statutory treatment.

Separate property tax from National Insurance, VAT, Capital Gains Tax and company tax. A landlord with employment, savings or dividend income also needs the wider Income Tax ordering and band calculation. Keep the official rate table, effective date and source for the tax year, and label any announced measure as a proposal until enacted. Cash-flow payments on account can arrive before the final liability is known.

Model the cash flow with the Property Income Calculator→, then read the UK Tax Changes 2027/28 guide for the wider savings and pension changes. For property purchase decisions, compare the result with the Stamp Duty Land Tax guide and the property CGT guide.

Official sources

• UK Parliament: Finance Act 2026
• HMRC: changes to property, savings and dividend income tax rates
• HMRC: property income rates technical note
• HM Treasury: Budget 2025
• HMRC: tax-free allowances on property and trading income

These UK Parliament, HMRC and HM Treasury sources are the official references for the 2027/28 property rates, property allowance, finance-cost context and statutory policy status discussed here.