Landlord Tax Changes:  Landlord tax changes are altering how rental income, ownership costs and property finance should be reviewed.

From April 2026, Making Tax Digital began affecting higher-income landlords. Further property income tax changes follow in April 2027.

These reforms do not decide whether a landlord should own property personally or through a company. However, they change the figures that landlords, tax advisers and mortgage advisers must examine.

Tax rules change the arithmetic. The ownership structure determines how that arithmetic behaves over time.

What Buy-to-Let Advisers Need to Know

• Making Tax Digital started affecting qualifying landlords from 6 April 2026.
• Separate property income tax rates begin from 6 April 2027.
• Furnished holiday letting tax advantages ended from April 2025.
• Higher SDLT rates increase the initial cost of many additional property purchases.
• Limited company ownership is not automatically more tax-efficient.
• Mortgage advice and tax advice must remain clearly separated.
• Landlords should obtain qualified tax advice before changing ownership structure.

Property Income Tax Rates From April 2027

Separate property income tax rates will apply from 6 April 2027.

The rates will be:

• Property basic rate: 22%
• Property higher rate: 42%
• Property additional rate: 47%

These rates apply to property income rather than employment income.

For individual residential landlords, finance cost relief will be calculated using the 22% property basic rate. Higher-rate landlords will not receive relief at their full property income tax rate.

This could increase the difference between gross rental income and the landlord’s final retained income.

Advisers should not calculate or interpret a client’s tax liability. However, the change may affect:

• The landlord’s expected net rental position.
• Available personal income.
• Portfolio planning.
• Future borrowing decisions.
• The ownership structure being considered.

Landlords can review the official HMRC property income tax changes with their accountant or tax adviser.

Making Tax Digital for Landlords

Making Tax Digital for Income Tax requires affected landlords to keep digital records and send quarterly updates using compatible software.

The implementation thresholds are based on qualifying gross income before expenses.

The current timetable is:

• From 6 April 2026: Qualifying income above £50,000.
• From 6 April 2027: Qualifying income above £30,000.
• From 6 April 2028: Qualifying income above £20,000.

Income from property and sole trader activity may be combined when HMRC assesses the threshold.

This change is mainly administrative. However, improved digital records may also expose weaknesses in a landlord’s cash flow or record keeping.

Mortgage advisers may need clear evidence of rental income, expenditure and portfolio performance. Digital reporting does not replace lender documentation requirements.

Affected landlords should check the latest Making Tax Digital guidance from HMRC.

Furnished Holiday Letting Tax Changes

The furnished holiday lettings tax regime ended from April 2025.

Previously, qualifying properties received specific tax treatment. This included wider mortgage interest deductions and access to certain capital allowances.

Income and gains from these properties are now generally treated within the standard property business rules.

The change can affect:

• Finance cost treatment.
• Capital allowance claims.
• Pension contribution calculations.
• Tax treatment when a property is sold.
• The financial case for operating a short-term let.

Mortgage suitability still depends on the intended property use. A standard buy-to-let mortgage may not permit holiday letting or frequent short-term occupation.

Advisers should confirm the actual letting model before discussing lender options.

Higher SDLT Costs for Additional Properties

Higher Stamp Duty Land Tax rates apply to many additional residential property purchases in England and Northern Ireland.

The additional property surcharge increased from three to five percentage points from 31 October 2024.

The temporary residential thresholds also ended from April 2025. This increased acquisition costs for many investors.

The rules can apply to:

• Individual landlords.
• Married couples and civil partners.
• Property companies.
• Partnerships.
• Buyers who own residential property elsewhere.

Buying through a limited company does not automatically remove the higher SDLT charge.

Advisers should ensure that landlords include tax, legal, valuation and mortgage costs within their available funds. SDLT should be confirmed by a solicitor or qualified tax adviser.

High Value Council Tax Surcharge From April 2028

The government plans to introduce a High Value Council Tax Surcharge in England from April 2028.

It is expected to apply to owners of residential property valued at £2 million or more. The charge will sit alongside the existing Council Tax liability.

This may be relevant to landlords with high-value properties, particularly in London and parts of South East England.

Detailed implementation rules should be checked before the measure takes effect. Advisers should avoid using estimated liabilities as confirmed figures.

Personal or Limited Company Buy-to-Let?

The changing tax position may lead more landlords to consider limited company ownership.

A company may deduct qualifying finance costs when calculating taxable profits. However, that does not make a company structure suitable for every landlord.

The complete comparison may include:

• Corporation tax.
• Personal tax when profits are withdrawn.
• Dividend or salary treatment.
• Mortgage pricing and lender choice.
• Accountancy and administration costs.
• Legal responsibilities.
• Capital Gains Tax.
• SDLT on a property transfer.
• Available reliefs.
• Estate and succession planning.

Moving an existing property into a company is normally treated as a legal transfer. It can therefore create tax, legal and refinancing costs.

Mortgage advisers should explain available lending structures without recommending a tax structure. Clients considering company ownership should obtain professional tax and legal advice.

Consumers seeking suitable mortgage advice can use the limited company buy-to-let adviser search provided by Connect Experts.

A Practical Review for Mortgage Advisers

When discussing buy-to-let finance, advisers should establish:

• Whether the property is held personally or through a company.
• Whether the client already owns other properties.
• The intended letting model.
• Whether the landlord is expanding or refinancing a portfolio.
• Whether professional tax advice has been obtained.
• Whether the proposed mortgage matches the legal borrower.
• Whether purchase costs have been included.
• Whether the lender’s rental calculation remains affordable.
• Whether future tax changes could affect the client’s plans.

The adviser should record the client’s chosen structure and the source of any tax guidance.

How Connect Supports Buy-to-Let Advisers

Buy-to-let cases increasingly involve ownership structures, portfolio assessments and specialist lender criteria.

Connect provides brokers with access to a specialist mortgage network for advisers covering mainstream and complex property finance.

Members can also use adviser services for suitable packaging, referral and case support routes.

Advisers considering a network with buy-to-let expertise can join Connect Network and discuss the support available.

Important Tax and Mortgage Advice Notice

This article provides general information for mortgage intermediaries. It does not provide tax, legal, accounting or investment advice.

Tax treatment depends on individual circumstances and may change. Clients should obtain advice from a suitably qualified tax professional before buying, transferring or restructuring property.

The FCA does not regulate every form of buy-to-let or commercial mortgage.