The 2026 tax year brings significant changes for UK landlords, with new compliance requirements taking effect and major rate changes on the horizon. Understanding these landlord tax changes 2026 is crucial for maintaining compliance and planning your property investment strategy.

The most immediate impact comes from Making Tax Digital (MTD) becoming mandatory for most landlords from April 2026, while even bigger changes to property tax rates are scheduled for April 2027. Here's every change you need to know about.

Making Tax Digital for Income Tax: Mandatory from April 2026

The biggest immediate change for landlords is Making Tax Digital (MTD) for Income Tax becoming mandatory from 6 April 2026. This affects any landlord with gross property income over £10,000 per year.

Under MTD, landlords must:

  • Keep digital records using compatible software
  • Submit quarterly updates to HMRC
  • File an end-of-period statement (EOPS) after the tax year ends
  • Complete a final declaration to replace the traditional self-assessment

The quarterly reporting deadlines are one month after each quarter end: 5 May, 5 August, 5 November, and 5 February. Missing these deadlines triggers penalties starting at £200 per quarter.

Landlords with gross property income below £10,000 can still use MTD voluntarily but aren't required to. This threshold applies to total gross rental income across all properties, not per property.

Property Income Tax Rates: Major Changes from April 2027

While 2026 brings MTD compliance, the bigger story is what's coming in April 2027. From the 2027/28 tax year, property income will be subject to separate, higher tax rates:

  • Basic rate: 22% (instead of 20%)
  • Higher rate: 42% (instead of 40%)
  • Additional rate: 47% (instead of 45%)

These rates apply only to property income, not employment or other income sources. This represents a significant increase in the tax burden for landlords, particularly those in higher rate brackets.

The change affects all types of property income including:

  • Rental income from residential properties
  • Commercial property rents
  • Room rental income
  • Property-related trading income

Section 24 Interest Relief Restrictions Continue

The Section 24 restrictions remain fully in place for 2026/27, with no changes announced. Landlords can still only claim mortgage interest relief at the basic rate of tax (20% tax credit), regardless of their marginal tax rate.

Combined with the higher property tax rates from 2027, this creates a significant tax burden. A higher-rate taxpayer will pay 42% tax on rental profits while only receiving 20% relief on mortgage interest.

Capital Gains Tax Rates and Allowances

Capital gains tax (CGT) rates on property remain unchanged for 2026/27:

  • Basic rate taxpayers: 18%
  • Higher/additional rate taxpayers: 24%

The annual exempt amount stays at £3,000 for 2026/27, having been reduced from £12,300 in previous years. This low allowance means most property disposals will trigger a CGT liability.

For detailed CGT planning, see our complete capital gains tax guide.

SDLT Surcharge Remains at 5%

The higher rate of Stamp Duty Land Tax (SDLT) for additional properties remains at 5%, having increased from 3% in October 2024. This applies to:

  • Second homes and buy-to-let purchases
  • Properties bought by companies
  • Purchases where you already own another residential property

Combined with standard SDLT rates, this creates a significant upfront cost for property acquisitions.

Corporation Tax Rates for Property Companies

For landlords operating through limited companies, corporation tax rates for 2026/27 remain:

  • Small profits rate: 19% (profits up to £250,000)
  • Main rate: 25% (profits above £250,000)
  • Marginal rate: 26.5% (profits between £250,000 and £250,000)

With property income tax rates rising to 22%/42%/47% from 2027, incorporation through a limited company becomes increasingly attractive for higher-rate taxpayers.

Furnished Holiday Lettings: Regime Abolished

The Furnished Holiday Lettings (FHL) regime was abolished from April 2025, with no replacement announced for 2026. Properties previously qualifying as FHL are now treated as standard rental properties, losing benefits like:

  • Capital allowances on furniture and equipment
  • Business Asset Disposal Relief on sales
  • Ability to offset losses against other income

This change particularly affects operators of holiday lets and serviced accommodation.

Renters' Rights Act: Section 21 Abolished

From May 2026, landlords will no longer be able to use Section 21 'no-fault' evictions under the Renters' Rights Act. This doesn't directly affect tax but has significant implications for property investment strategy and cash flow planning.

Landlords will need to rely on Section 8 grounds for possession, which require specific reasons like rent arrears or breach of tenancy terms.

Tax Changes April 2026: Planning Considerations

These new tax rules for landlords require careful planning:

MTD Compliance Preparation

Start preparing for MTD now by:

  • Choosing compatible software
  • Digitising your record-keeping systems
  • Understanding quarterly reporting requirements
  • Considering professional support for compliance

Income Tax Rate Planning

With higher property tax rates from 2027, consider:

  • Whether incorporation makes sense for your portfolio
  • Timing of property disposals
  • Pension contributions to manage tax rates
  • Spouse transfers to utilise lower rate bands

Cash Flow Management

Higher tax rates and quarterly reporting mean more frequent tax payments. Ensure you have adequate cash flow planning and reserves.

Getting Professional Support

The complexity of these changes means most landlords benefit from professional advice. Property accountants can help with:

  • MTD compliance and software setup
  • Tax planning for rate changes
  • Incorporation analysis and implementation
  • Ongoing compliance and reporting

The cost of professional support is typically outweighed by the tax savings and compliance benefits, particularly given the penalties for getting MTD wrong.

Key Deadlines and Action Points

Mark these critical dates:

  • 6 April 2026: MTD for Income Tax becomes mandatory
  • May 2026: Section 21 evictions abolished
  • 5 May 2026: First MTD quarterly update due
  • 6 April 2027: Higher property tax rates take effect

Start planning now for these changes. The transition to higher tax rates and digital compliance represents the biggest shift in landlord taxation for decades.

For comprehensive support with these changes, explore our property tax services or get in touch to discuss your specific situation.