2027 Tax Rates and the Incorporation Decision for Property Landlords

From 6 April 2027 rental income stops being taxed like other income. Finance Act 2026 (sections 6 to 7 and Schedule 1, Royal Assent 18 March 2026) introduced separate property income rates of 22% basic, 42% higher and 47% additional, two points above the general rates. With that change has come a widespread, and wrong, assumption: that 6 April 2027 is a deadline to get property into a limited company before incorporation becomes harder or dearer.

It is not a deadline. The date changes what you pay on personally held rental profit. It does not change the cost or the mechanics of moving property into a company, which are governed by capital gains tax and stamp duty that take no notice of the calendar. This is the quick-decision version of the question: what the new rates actually do, what the corporate alternative really costs, and when acting early helps. For the full personal-versus-company comparison, the worked extraction maths and a step-by-step decision sequence, see our companion guide on the 2027 tax rates and the incorporation decision for UK landlords.

What actually changes on 6 April 2027

The new rates apply to property income after allowable expenses but before the Section 24 mortgage interest restriction, and they cover landlords in England, Wales and Northern Ireland. Scotland is the only part of the UK carved out, because property income for Scottish residents follows rates set at Holyrood. There is no separate Welsh property rate for 2027/28; the power for Wales to set its own is a future enabling provision in Finance Act 2026 that is not in force for that year.

Band	General income tax rate (to 2026/27)	Property income rate (from 2027/28)
Basic rate	20%	22%
Higher rate	40%	42%
Additional rate	45%	47%

The band you fall into depends on all your income, not just rent, so a salaried higher-rate taxpayer with a small rental profit pays 42% on that profit from 2027 even though the rent on its own would have sat in the basic band. Companies are untouched by these rates. A company holding rental property pays corporation tax: 19% on profits up to £50,000, 25% above £250,000, and an effective 26.5% on the slice between because of marginal relief. Most ordinary buy-to-let companies sit in the 19% band. For the enacted rate detail and the rates pillar, see the 2027 property income tax rates for UK landlords.

The headline trade-off in one paragraph

Here is the whole decision compressed. On one side, a company taxes rental profit at 19% to 25% rather than 22% to 47%, and it deducts mortgage interest in full rather than at the restricted Section 24 credit. On the other side, the profit is the company's until you extract it, and a dividend is taxed again on top of corporation tax, while moving existing property into the company costs capital gains tax and a 5% SDLT surcharge up front. The corporate route wins where you are a higher or additional-rate landlord, geared, and reinvesting rather than drawing the rent. It usually loses where you are a basic-rate landlord living on the income. Everything else is detail on top of that sentence.

Why 6 April 2027 is not a cut-off

The reason the date is not a deadline is that the two costs of getting into a company are date-independent. Transferring property to your own company is a connected-party disposal at market value for CGT, taxed at 18% (basic) or 24% (higher) on residential gains after the £3,000 annual exempt amount (the unified rates under FA 2024). That charge depends on the latent gain in the property, not the year you act. The 5% additional-dwellings SDLT surcharge the company pays on the transfer is likewise the same in 2026, 2027 or 2028. Neither cost rises or falls because you crossed 6 April 2027.

What does change with timing is only how many years of any post-2027 saving you collect. If incorporation saves a higher-rate geared landlord tax each year, starting earlier banks more of those years. But that is a holding-period point, not a cliff. A landlord who would not benefit at all gains nothing by rushing, and a landlord who would benefit loses only a year's worth of saving by waiting a year, not a step-change in cost.

Date or event	A deadline to incorporate?	What it actually does
6 April 2027 (new 22% / 42% / 47% property rates)	No	Changes the personal rate on rental profit; leaves the cost of incorporating untouched
The date you transfer property to the company	Yes, for CGT and section 162 timing	Fixes the market value, the CGT and the section 162 claim window
First anniversary of the 31 January after the transfer tax year	Yes	Section 162 incorporation relief must be claimed by this date
6 April 2026 / 2027 / 2028 (MTD income thresholds £50k / £30k / £20k)	Yes, for personal MTD	Triggers digital records and quarterly updates on personally held property
31 October 2024 (SDLT surcharge rose 3% to 5%)	Already passed	The 5% surcharge now applies to a company acquiring residential property

The entry cost that timing does not move

Because the entry cost is what usually decides whether incorporation is worth it, it is worth being concrete about the two charges, both of which are independent of the April 2027 date.

Capital gains tax. On a portfolio sitting on £100,000 of latent higher-rate gains, the CGT on transfer is roughly £24,000, payable whether you incorporate in 2026 or 2028. The annual corporate saving has to recover that before incorporation is ahead, which is why the size of the gain matters as much as the rate gap. Our guide to calculating CGT on a transfer to a company works through the figures.

Stamp duty. The company is treated as buying each property at market value and pays the 5% higher rates for additional dwellings on top of the standard bands. There is no group relief between you and your own new company. The narrow exception is genuine partnership incorporation under FA 2003 Schedule 15, where the sum-of-lower-proportions calculation can cut the chargeable consideration, but only for a real, established letting partnership and subject to a three-year clawback if capital is withdrawn.

This is also where the old framing of this decision tended to drift into irrelevance. Passive buy-to-let has nothing to do with IR35, which concerns disguised employment, so it is not a cost to weigh in the incorporation decision at all. The real entry costs are CGT and SDLT, and neither changes with the date.

Where timing genuinely bites: section 162

The one place timing really matters is the section 162 claim window, and it runs off the transfer, not off April 2027. Section 162 TCGA 1992 defers (it does not avoid) the CGT where the whole of a property business is transferred to a company wholly or partly in exchange for shares: the gain rolls into the base cost of the shares. For transfers on or after 6 April 2026 the relief is no longer given automatically and must be claimed, under the new claim requirement in section 162(1)(b) inserted by Finance Act 2026, by the first anniversary of the 31 January following the transfer tax year.

The harder test is the word business. HMRC accepts incorporation relief for property only where the lettings amount to a genuine business with active, time-intensive management, not passive rent collection from one or two properties. Ramsay v HMRC [2013] is the leading authority. Treat section 162 as available to active portfolio landlords who can evidence the activity, and assume it is not available otherwise. The mechanics are covered in full in our note on section 162 incorporation relief for property landlords, and the deferral angle in incorporating rental property without an immediate CGT charge.

Does acting before April 2027 actually save tax?

The honest answer is that acting early helps only landlords for whom incorporation pays at all, and then only by banking extra years of the rate gap. The table below sorts the common profiles. For the full personal-versus-company worked maths behind each row, including how full extraction can cost more than the personal charge on rate alone, use the companion decision guide rather than expecting this quick version to reproduce it.

Landlord profile	Does incorporation pay at all?	Does acting before April 2027 help?	Why
Basic-rate, lives on the rent	Usually no	No	The cost of extracting profit cancels the corporate advantage regardless of date
Higher or additional-rate, geared, reinvests	Often yes	Marginally, by banking more years of the rate gap	The saving is per year, so an earlier start collects more years, but the entry cost is unchanged
Higher-rate with a large latent gain, no section 162	Depends on payback	No urgency	The CGT entry cost is date-independent; the recovery period drives the decision
Uncertain, or a single property	Often no transfer needed	Irrelevant	Buy future purchases through the company instead; no transfer and no deadline

For a fuller treatment of the threshold question (the portfolio size and circumstances at which a corporate structure starts to make sense), see when a property holding company structure makes sense. And for a worked illustration of the leveraged case, our case study of a 10-property portfolio with a £200,000 mortgage shows the numbers on a realistic geared portfolio.

The no-transfer route most landlords overlook

The cleanest answer to the before-or-after-2027 question is often to ignore it entirely. A landlord uncertain about incorporating an existing portfolio can buy the next property through a company from day one. There is no transfer, so no CGT and no SDLT surcharge beyond what any additional purchase attracts anyway, and the company starts taxing that property's rent at corporation tax from the outset. Existing personally held property stays where it is.

For landlords who do want to move some existing stock, selective incorporation (transferring only the highest-yielding or most heavily geared properties) is possible but cannot use section 162, because that relief needs the whole business to transfer, so CGT crystallises on what you move. The phasing and selection mechanics are covered in our phased transfer guide, and the structuring choices in the buy-to-let limited company guide.

The dates that do have deadlines

It is worth separating the mythical April 2027 deadline from the dates that genuinely carry one. Making Tax Digital for Income Tax is mandatory for individual landlords with qualifying income above £50,000 from 6 April 2026, above £30,000 from 6 April 2027 and above £20,000 from 6 April 2028, requiring digital records and quarterly updates on personally held property. A company is outside MTD for Income Tax because it reports under corporation tax instead, so incorporating can simplify the personal filing position. That is a side benefit, not a reason to incorporate, and certainly not a reason to rush into it before a date that does not bind.

Where this leaves the timing question

There is no cliff at 6 April 2027. The new rates raise the case for incorporation for higher and additional-rate geared landlords who reinvest, and do little for basic-rate landlords who live on the rent, but neither group faces a closing window. The questions that decide it (your marginal rate, your gearing, whether you draw or reinvest, the latent gain, and whether you qualify for section 162) are unchanged by the calendar. Establish whether incorporation is right for you first, using the full decision guide, and only then let timing decide how many years of the saving you collect. A specialist property accountant can model both structures over a realistic holding period, including the upfront CGT and SDLT, before you commit either way.