For UK landlords, 6 April 2027 is the date the separate property income tax rates take effect: 22% basic, 42% higher and 47% additional, enacted by Finance Act 2026 for England, Wales and Northern Ireland (Scotland is carved out of the 2027/28 rates). This page is not another explainer of what changes. It is the decision-and-timing playbook: what to do before 6 April 2027, in what order, and according to the size of your portfolio.
The single most useful thing to understand up front is that the Section 24 (S24) finance-cost reducer rises to 22% in step with the rates, so no new basic-rate wedge opens. If you want the rate mechanics in full, the 2027 property tax rates and Section 24 page works through the wedge with examples, and the 2027 property income tax rates pillar sets out the bands. Because the wedge does not widen, the real planning value is in timing and structure, not in dodging a new penalty. That is what the rest of this page is about.
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How the 2027 change reframes your decisions
The mechanics are short. From 6 April 2027 property income is taxed at 22%, 42% and 47% rather than the ordinary 20%, 40% and 45%, and the Section 24 mortgage-interest credit rises from 20% to 22% in step (Finance Act 2026 Schedule 1, amending the property finance-cost relief in ITTOIA 2005 s.274A). A basic-rate landlord's income and credit therefore both sit at 22%, so nothing new opens up; a higher-rate landlord's gap between the 42% rate and the 22% credit stays at 20 percentage points, exactly as 40% minus 20% did before. The net effect is a flat 2 percentage points more tax on rental profit, no more. If you have read elsewhere that "the credit stays at 20%" or that "a new wedge opens", that is wrong, and the Section 24 complete guide sets out the restriction in detail.
Because the wedge does not widen, the planning levers are all about when you act and how your portfolio is structured. There are five that matter before 6 April 2027:
- Disposal timing. Whether to sell before or after the rate change (CGT is unchanged either way).
- Repair timing. Whether to defer discretionary repairs into 2027/28 to relieve them at the higher rate.
- Spousal income shifting. Using a Form 17 declaration to move income onto a lower-rate partner.
- Band management. Pension contributions and income timing that keep profit in a lower band.
- Structure and readiness. Modelling incorporation (with its lead time and s.162 claim), plus cash reserves and Making Tax Digital.
Your 2027 decision tree by portfolio size
The right first move depends far more on how leveraged you are than on the headline rate. The table below is a starting point, not a prescription. A landlord with high borrowing across a few properties can face a sharper decision than one with ten unencumbered flats.
| Portfolio | Typical 2027 priority | First action before 6 April 2027 | Likely lead time |
|---|---|---|---|
| 1 to 3 properties, low borrowing | Maximise deductions and use the spousal split | Review the Form 17 position and repair timing | Weeks |
| 1 to 3 properties, high borrowing | Decide between holding and incorporating | Commission an incorporation feasibility model | 6 to 12 months |
| 4 to 10 properties | Model incorporation, Form 17 and disposal timing together | Commission a portfolio tax model | 6 to 12 months |
| 10+ properties | Incorporation modelling near-certain, plus MTD and cash reserves | Start the incorporation lead time and s.162 evidence trail | 12 to 18 months |
Read it as a sequencing guide. The lower-borrowing landlords can act late because their levers (Form 17, repair timing) are quick to pull. The leveraged and larger portfolios need to start now, because their main lever, incorporation, is a project measured in months, and because the s.162 incorporation-relief claim and its evidence trail now sit inside that timeline. If you are unsure which row you are in, the borrowing level is usually the deciding factor: the more mortgage interest you carry personally, the stronger the case for modelling the company route.
The pre-6-April-2027 planning calendar
The levers fall into clear windows. Treat the 2026/27 tax year as the working space for anything that depends on the current rates, and the run-up before that as the time to settle the slow decisions.
| Window | What to do | Why this window |
|---|---|---|
| Now to early 2027 | Model your position under both rate sets; if incorporating, start the feasibility work and the s.162 evidence trail | Incorporation needs 6 to 18 months and a claim (TCGA 1992 s.162(1)(b)) |
| During 2026/27 (to 5 April 2027) | Consider accelerating discretionary income, deferring discretionary repairs into 2027/28, and completing any planned disposal | The last full year under the 20%, 40% and 45% property rates |
| Before 6 April 2027 | File any Form 17 declaration you want to apply for 2027/28; make band-managing pension contributions | A Form 17 takes effect from the date of the valid declaration, not retrospectively |
| From 6 April 2027 | New 22%, 42% and 47% rates apply; the S24 credit is given at 22%; the £30,000 MTD threshold also bites | Optimise within the new framework and stay compliant |
The routine end-of-tax-year checklist still applies for the housekeeping; this calendar is the 2027-specific overlay on top of it.
Disposal timing: sell before or after 6 April 2027?
Start with the fact that removes most of the urgency: capital gains tax rates do not change on 6 April 2027. They stay at 18% within the basic-rate band and 24% above it, with a £3,000 annual exempt amount, and the 60-day reporting and payment rule on completion is unchanged. So there is no CGT cliff-edge to beat. The decision is driven instead by the after-tax rent you forgo by holding, which falls by 2 percentage points from 2027/28.
| Factor | Sell before 6 April 2027 | Hold past 6 April 2027 |
|---|---|---|
| CGT rate on the gain | 18% or 24% | 18% or 24% (unchanged) |
| Annual exempt amount | £3,000 | £3,000 (unchanged) |
| Ongoing property income tax rate | 20% / 40% / 45% to 5 April 2027 | 22% / 42% / 47% from 6 April 2027 |
| 60-day CGT return | Due on completion | Due on completion |
| Outcome for the asset | Proceeds freed now | Rental income continues |
The maths shows how small the rate effect is on its own. Take a higher-rate landlord with one property netting £8,000 a year. In 2026/27 they keep £4,800 after 40% tax; from 2027/28 they keep £4,640 after 42%, a difference of £160 a year. Against the CGT on the gain, the selling costs and the loss of a yielding asset, a £160 annual difference rarely justifies bringing a sale forward. Sell because the property no longer fits the portfolio, not because of the date. The capital gains tax on property guide covers the disposal mechanics and reliefs in full.
Repair timing: defer discretionary repairs into 2027/28
This is one of the few places the rate rise creates a clean, if small, opportunity. Revenue repairs (a like-for-like boiler replacement, fixing a leak, redecorating) are deducted against rental profit in the year the work is done. Capital improvements (an extension, a new kitchen that upgrades rather than replaces) are not deductible against income; they add to the CGT base cost instead. Because property income is taxed at the higher 22%, 42% and 47% from 2027/28, deferring discretionary revenue repairs from 2026/27 into 2027/28 relieves them at the higher rate.
Take a higher-rate landlord with £10,000 of deductible repairs. Done in 2026/27 the relief is worth £4,000 (40%); deferred into 2027/28 it is worth £4,200 (42%), an extra £200 per £10,000. That is real but modest, so the rule of thumb is simple: only defer where the work was going to happen around that time anyway, and never defer urgent or tenant-safety work for a tax saving. A boiler that has failed in February gets fixed in February.
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Spousal income shifting: Form 17 before 2027
For jointly held property, married couples and civil partners are taxed 50/50 by default, regardless of who actually owns what share. A Form 17 declaration lets you instead tax the income on the underlying beneficial ownership, for example 25/75 toward the lower-earning partner, so that more property profit is taxed at 22% rather than 42% or 47% from 2027/28. Because transfers of beneficial interest between spouses or civil partners living together are made on a no-gain-no-loss basis (TCGA 1992 s.58), there is no CGT cost to rebalancing ownership before you declare the new split.
Consider a couple with £20,000 of joint property profit, where one is a higher-rate taxpayer and the other has spare basic-rate band. On the default 50/50 split, half the profit is exposed to the 42% rate from 2027/28. Rebalancing to a 25/75 beneficial split in favour of the lower-rate partner and declaring it on Form 17 moves a larger slice onto the 22% rate. The timing rule is the catch: a Form 17 takes effect from the date of the valid declaration, not retrospectively, so to have it apply for the whole of 2027/28 it should be filed before that year begins. Note too that finance costs must follow the same beneficial split as the income; you cannot declare income 75/25 while allocating interest differently. The Form 17 declaration guide covers exactly how to file and revoke it.
Band management: pension contributions and income timing
Several of the 2027 levers come down to controlling which band your property profit falls into, because the gap between 22% and 42% is the prize. A personal pension contribution extends your basic-rate band by the grossed-up amount, which can keep more of your rental profit taxed at 22% rather than 42% from 2027/28, while also relieving the contribution. Timing discretionary income into the 2026/27 year, where it is still taxed at the lower rates, works in the same direction. For a landlord already operating through a company, employer pension contributions are a deductible business cost and fall outside the personal property rates altogether; the company employer pension contributions guide covers that route for directors.
The caveat is that pension planning interacts with the annual allowance, the tapered allowance for higher earners and your wider income, so it should be modelled alongside your property position rather than treated as a standalone trick. Used well, though, it is one of the cleaner ways to soften the step from 22% to 42%.
Incorporation: trigger points, lead time, and the s.162 claim
Incorporation removes Section 24 entirely, because companies deduct mortgage interest in full before corporation tax, so it is most attractive for leveraged four-to-ten and ten-plus portfolios. But it is a 6 to 18 month project, not a year-end tactic, and 6 April 2027 is not a hard cut-off for it. The pieces that take time are company formation, arranging limited-company buy-to-let mortgages (which run at higher rates than personal lending), the stamp duty and CGT calculation on transferring property in, and the operational handover.
The change that now sits at the centre of the lead-time planning: since 6 April 2026, incorporation relief under TCGA 1992 s.162 is no longer automatic. It must be claimed, and the claim is due by the first anniversary of the 31 January following the tax year in which the transfer takes place (TCGA 1992 s.162(1)(b)). The old s.162A election that used to disapply the relief was repealed by Finance Act 2026 s.39, so the position is now claim-or-no-relief. The underlying "business" test still has to be met: the lettings must amount to a genuine business (active, sufficiently substantial management), not passive holding.
For a ten-plus portfolio landlord, that combination is exactly why 12 to 18 months is realistic. You are gathering evidence that the lettings are a business, modelling the SDLT and CGT cost of the transfer, arranging company finance, and building in the s.162 claim and its deadline rather than relying on relief arriving automatically. Three pages handle the depth here: the buy-to-let limited company guide for the structure, incorporating without a CGT charge for the s.162 mechanics, and corporation tax versus income tax for landlords in 2027 for the comparison maths that tells you whether to do it at all.
Cash reserves, payments on account, and MTD readiness
Two operational items round out the plan, and they are the ones landlords most often overlook. The first is cash flow. Higher property income tax from 2027/28 raises your self-assessment bill, and with it the payments on account due each January and July. The first 2027/28 balancing payment and the revised payments on account land in January 2029, but the cash needs to be set aside from 2027, so build the higher reserve into your modelling a year ahead rather than meeting it as a surprise.
The second is Making Tax Digital for Income Tax, which is live and phasing in by income: £50,000 from 6 April 2026, £30,000 from 6 April 2027 and £20,000 from 6 April 2028 (the Income Tax (Digital Obligations) Regulations 2026, SI 2026/336). The £30,000 step lands on the same day as the new property rates, so a sole-trader landlord with gross qualifying income above £30,000 needs MTD-compatible software and quarterly updates from that date. Jointly owned property is tested on each owner's share of gross rents. Treat MTD readiness as a 2027 action-calendar item, not an afterthought; the Making Tax Digital deadline guide sets out what compliance involves.
Common 2027-planning mistakes to avoid
The pitfalls cluster around acting on the wrong instinct rather than the numbers:
- Rushing incorporation without modelling both routes, or without budgeting for the s.162 claim and its deadline. Incorporation suits some portfolios and worsens others.
- Assuming a CGT cliff-edge that does not exist. Capital gains tax rates are unchanged across 6 April 2027, so a forced pre-deadline sale is usually the wrong call.
- Deferring urgent repairs purely to chase a small rate difference. The roughly £200 per £10,000 saving never justifies leaving a tenant without heating.
- Missing the Form 17 timing. A declaration applies from its date forward, so leaving it until after 6 April 2027 forfeits the split for that year.
- Overlooking the cash impact of higher payments on account once the new rates lift the bill.
The thread running through all five is the same: the 2027 changes reward a model of your own position, not a generic rule. The guide to property accounting services explains what that modelling typically covers.
Key takeaways for 2027 planning
The 2027/28 changes are real but narrower than the headlines suggest: 2 percentage points more on property income, no widening of the Section 24 wedge, and no change to capital gains tax. That means the value is in timing and structure. Settle the slow decisions first (incorporation and ownership rebalancing), use the 2026/27 year for the rate-sensitive moves (disposals, repair deferral, Form 17, pension contributions), and get the operational pieces (MTD software, cash reserve) in place for 6 April 2027. Scale the depth of the work to your portfolio, and model your own numbers rather than acting on a date.