The Autumn Budget, delivered on 28 October 2026, has brought further changes for private landlords, with the taxation of rental income once again firmly in the spotlight.
For landlords across Northamptonshire and beyond, one of the biggest announcements is a further increase in the rate of Income Tax applied to property income from April 2027. This comes at a time when landlords are already preparing for considerable regulatory change across the private rented sector.
So, what is changing, and what should landlords be thinking about now?
Property income tax is increasing from April 2027
Perhaps the most significant announcement for individual landlords is the increase in tax rates applied to property income. Last year’s Budget had already set a two percentage point rise. This Budget doubles it to four points above today’s rates.
| Tax band | Current rate | Previously announced | From 6 April 2027 |
| Basic rate | 20% | 22% | 24% |
| Higher rate | 40% | 42% | 44% |
| Additional rate | 45% | 47% | 49% |
The new rates apply to landlords in England, Wales and Northern Ireland. In simple terms, that is an extra £400 in tax for every £10,000 of taxable property profit compared with today, whichever band it falls into. Income Tax thresholds also remain frozen until April 2031, so more rental profit may be drawn into higher bands over time.
For many landlords, this makes understanding the true net return from a rental property more important than ever, rather than simply looking at the headline monthly rent.
The impact will, of course, depend on each landlord’s individual circumstances, including other income, borrowing, allowable expenditure and the way in which their property portfolio is structured.
What about mortgage interest relief?
Individual landlords generally cannot deduct residential mortgage interest from rental income in the same way they could before the Section 24 changes. Instead, finance costs receive tax relief through a tax credit.
For landlords with borrowing, particularly those with highly geared portfolios, this can make a significant difference to the amount of profit actually retained after tax.
With taxation changing again, we believe landlords should increasingly be looking at the performance of their properties after finance costs, management, maintenance, compliance and tax, rather than simply concentrating on gross rental yield.
Should landlords consider a limited company?
The Budget will inevitably lead some landlords to ask whether they should own investment property through a limited company. The answer is not necessarily straightforward.
While company ownership can offer advantages in certain circumstances, moving an existing property or portfolio into a company can have significant tax, mortgage and legal implications. These could include:
- Capital Gains Tax considerations
- Stamp Duty Land Tax
- Refinancing costs and potentially different mortgage rates
- Accountancy costs
- Legal costs
- Tax considerations when taking profits out of the company
A limited company therefore isn’t automatically the right answer simply because personal property tax rates are increasing. Before changing how a portfolio is structured, landlords should always take individual advice from a suitably qualified accountant or tax adviser.
Making Tax Digital is another important consideration
Tax rates aren’t the only thing landlords need to be thinking about. Making Tax Digital for Income Tax is changing the way many landlords keep and submit their financial information to HMRC. It is being introduced in stages, based on qualifying income (gross property income plus any self-employment income, before expenses):
- From 6 April 2026: qualifying income over £50,000
- From 6 April 2027: qualifying income over £30,000, based on the 2025/26 tax year
- From 6 April 2028: qualifying income over £20,000
Landlords within scope need to keep digital records and send quarterly updates to HMRC using compatible software. You can read HMRC’s latest announcement here.
This reinforces something we regularly discuss with landlords: good digital record keeping is becoming increasingly important. Accurate records of rental income, property management fees, maintenance expenditure, safety and compliance work, insurance and other costs will make complying with the changing reporting requirements considerably easier.
Landlords who haven’t already discussed Making Tax Digital with their accountant should consider doing so sooner rather than later.
The importance of cash flow
One thing the last few years have demonstrated is the importance of understanding the cash flow of an investment property. Interest rates, mortgage refinancing, maintenance costs, taxation and regulatory requirements can all have a considerable effect on the amount of income actually retained by a landlord.
A property achieving £1,500 per month may sound like it is producing £18,000 a year, but that’s only the starting point. Once mortgage costs, management fees, maintenance, insurance, compliance, void periods and tax are taken into account, the actual return can look very different.
That’s why we believe landlords should regularly review the performance of their investment, rather than assuming that because the rent arrives each month, the property is performing as well as it could.
What does this mean for the rental market?
The private rented sector continues to evolve. Landlords are dealing with increasing taxation alongside changes to regulation and the costs associated with maintaining good-quality rental accommodation.
However, demand for quality rental properties remains strong in many areas. For professional landlords with well-maintained properties, we continue to believe there is an important role to play.
Increasingly, though, successful property investment will be about professional management, careful financial planning and maximising the performance of each individual property.
What should landlords do now?
Our advice is simple: don’t panic and don’t make significant decisions purely because of a Budget headline. Instead, use the period ahead to conduct a proper review of your property or portfolio.
1. Review your rent
Is your property achieving a fair market rent? Even a property that appears profitable can be underperforming if the rent has fallen significantly behind the local market. A professional rental valuation can help establish where your property currently sits.
2. Understand your true net return
Don’t look at rent in isolation. Factor in:
- Mortgage and finance costs
- Maintenance
- Insurance
- Compliance costs
- Service charges and ground rent, where applicable
- Void periods
- Taxation
This gives a far more realistic picture of how the investment is actually performing.
3. Review your borrowing
If a fixed-rate mortgage is coming to an end, understand what refinancing could mean for your monthly cash flow. A relatively small change in the mortgage rate on a sizeable loan can materially change the profitability of a rental property.
4. Speak to your accountant
The right tax and ownership structure depends entirely on individual circumstances. If you haven’t reviewed your portfolio with your accountant recently, the Budget provides a sensible opportunity to do so.
5. Keep good records
With Making Tax Digital and changing reporting requirements, good financial record keeping is becoming increasingly important. Don’t wait until a reporting deadline to start getting your information together.
6. Review your portfolio property by property
Perhaps most importantly, don’t treat a portfolio as one single investment. Each property should justify its place within it. One may produce an excellent rental yield and have strong prospects for capital growth. Another could be absorbing significant maintenance costs while achieving a comparatively poor return. Understanding those differences can help landlords make much better long-term decisions.
Our view at Chelton Brown
There is no doubt that landlords are operating in an increasingly complex environment. Higher taxation alongside continued changes to regulation mean owning a rental property cannot be approached as passively as it perhaps once was.
But that does not mean property investment no longer works. It means landlords need to be more commercially focused. The right property, at the right rent, with sensible borrowing, efficient management and a clear understanding of costs can still form part of a successful long-term investment strategy.
At Chelton Brown, our role goes beyond simply finding a tenant and collecting the rent. We work with landlords to help them understand their local rental market, review rents, minimise void periods, maintain their properties and keep on top of the changes affecting the private rented sector.
Frequently asked questions
When do the new property income tax rates start?
From 6 April 2027, the start of the 2027/28 tax year. The rates will be 24% at the basic rate, 44% at the higher rate and 49% at the additional rate.
Will I need to use Making Tax Digital?
If your qualifying income (gross rent plus any self-employment income) was over £30,000 in the 2025/26 tax year, you will need to use Making Tax Digital for Income Tax from 6 April 2027. The threshold falls to £20,000 from April 2028.
Should I move my properties into a limited company?
Not without individual advice. A transfer can trigger Capital Gains Tax, Stamp Duty Land Tax, refinancing and legal costs, so it isn’t automatically the right answer. Speak to a suitably qualified accountant or tax adviser first.
Would you like to review your property or portfolio?
We’d be happy to have a conversation about how your property or portfolio is currently performing. We can discuss your current rental income, local market rent, management arrangements and any areas where there may be opportunities to improve performance.
Book a meeting with Edward Chelton Brown to arrange a no-obligation rental and portfolio review.
Alternatively, contact either of our offices:
Northampton: 4/5 George Row, Northampton, Northamptonshire, NN1 1DF. Tel: 01604 603433
Daventry: 59 High Street, Daventry, Northamptonshire, NN11 4BQ. Tel: 01327 879431
This article is intended as a general guide and does not constitute tax, financial or legal advice. Tax treatment depends on individual circumstances and legislation can change. Landlords should obtain advice from a suitably qualified accountant, tax adviser or other relevant professional before making financial or ownership decisions.
