Are landlords facing higher taxes?

This guide explains the full tax environment for landlords, what is already in place, and what future changes could mean for your finances. 

What taxes do landlords pay in the UK? 

UK landlords pay tax on rental income through their self-assessment tax return or, from 2026/27 tax year onwards, through Making Tax Digital (MTD) for income tax. Landlords may also face: 

How rental income is taxed 

Rental income is added to your total annual income and taxed at your marginal income tax rate.  

Reliefs and deductions 

Allowable expenses and reliefs are deducted from rental income before it is taxed. These include maintenance and repair costs and letting and professional fees. See our guide to landlord tax and expenses for more information. 

You can’t claim your mortgage interest as a deduction. Instead, you can claim a 20% tax reducer against the interest. If you are a basic rate taxpayer this will work out as the same relief but if you are: 

NICs for landlords? 

Rental income is generally considered to be investment income rather than self-employment income. As such landlords are not considered: 

Which landlords fall within Tier 3? 

HMRC’s manuals state that you fall into Tier 3 if you have a specific trade with which you run your property portfolio. It needs to meet both the gainful employment and trade, profession or vocation tests.  

Are NICs being introduced for all landlords? 

Recently there has been discourse and debate around introducing NICs to property income more widely from thinktanks. It is unclear whether the Government is going to adopt this policy until it publishes its Budget on 28th October 2026. 

The advantages of this policy could include: 

While the disadvantages would include: 

Recent and ongoing tax changes affecting landlords 

From the 2027/28 tax year, property income will be taxed at a higher rate than the standard UK income tax rate in England, Wales and Northern Ireland. Scotland does not yet have the power to change property income tax rates but expects to gain this power shortly. 

The tax reducer will increase to 22% for the 2027/28 tax year in line with the basic rate of property income tax.  

This rate increase adds to the reduction of tax advantages and increase in admin burden for landlords over recent years in the UK. See our article here for a list of recent tax and regulatory changes for landlords.  

The bigger picture – is the tax environment getting tougher? 

Yes, the tax environment has become more challenging for landlords in the UK from both a perception and policy perspective. This includes: 

Data shows HMRC received £104 million in additional tax revenue in 2025/26 from the Let Property campaign and other property-related compliance activity.  

How landlords can reduce their tax liability 

There are steps you can consider in order to reduce your tax burden as a landlord. 

Claim all allowable expenses 

Ensure you’re claiming every expense, allowance and relief available to you. See our guide here. 

Look at your ownership structure  

In certain circumstances, it may be more tax efficient to hold your properties through a limited company. We look at this option here.  

Plan for CGT before selling 

Take professional advice before selling a property to ensure you understand the future CGT bill you may face and take any steps required to make this more efficient.  

Key deadlines and compliance risks 

Reduce your risk of penalties and interest charges from HMRC by ensuring you are on top of all the deadlines and rules you face. For the key tax and reporting deadlines for 2026, see our guide. 

How TaxAssist Accountants Can Help 

TaxAssist Accountants has a wealth of experience helping landlords and we can help you with:  

Our summary of the Budget 2026 will be published here – bookmark now to read it shortly after the Government announcements are made. 

For more information see our landlords page.  

Last updated: 2nd September 2026