A higher-rate landlord in their own name will pay 44% on every pound of rental profit from April. The same portfolio in a limited company pays 25%. That 19-point gap is the tax case for incorporation, and the Budget just cemented it.
What Has Happened?
Chancellor John Healey presented his 2026 Autumn Budget on 28 October. The main property tax announcement was a second hike to the rates at which individual landlords are taxed on rental income. The 2025 Budget had legislated a two-percentage-point rise above standard income tax rates to take effect from 6 April 2027. This Budget added a further two points on top, also from April 2027.
The result: from 6 April 2027, individual landlords in England, Wales and Northern Ireland will be taxed on their rental profits at 24% (basic rate), 44% (higher rate) and 49% (additional rate). Those are the rates that apply to net rental income reported in a self-assessment return from 2027-28 onwards. Against today's rates of 20%, 40% and 45%, the cumulative increase across two Budgets is four percentage points in every band.
Company landlords are not affected. A buy-to-let property held in a limited company continues to be taxed at the corporation tax rate of 25%. That rate has not changed. The Budget did not introduce changes to stamp duty, the 5% additional dwelling surcharge, or capital gains tax rates on residential property (currently 18% and 24%).
Separately, HMRC data analysed by Bowmore Wealth Group, published ahead of the Budget, showed that buy-to-let investors reported £1.15bn in losses on residential property sales in the past year. That is up 32% from £870m the previous year. Bowmore attributed the rise to price stagnation in London and the South East, combined with the regulatory and compliance burden from the Renters' Rights Act, which took effect on 1 May 2026.
Why This Matters to UK Property Investors
The commercial effect of the April 2027 rates is straightforward to calculate. A higher-rate landlord generating £30,000 of net rental profit in their own name will pay £13,200 in income tax on that profit from 2027-28 onwards. The same landlord operating through a limited company and leaving profits in the company pays £7,500. The annual difference is £5,700 on £30,000 of profit. For a larger portfolio, that gap scales accordingly.
For additional-rate taxpayers, the impact is more direct still. At 49%, every pound of rental profit above the additional-rate threshold costs more in tax than the dividend yield on the FTSE 100. Rathbones' 2026 analysis of buy-to-let versus equities found the post-tax returns already comparable for many personal-name investors at current yields. At 49%, that comparison moves firmly against personal-name BTL for higher earners.
The HMRC losses data adds a specific dimension. The £1.15bn in crystallised BTL losses is mostly a London and South East story. In those markets, capital growth has stalled while costs have risen. Investors who bought in London in 2019 or 2020 and are selling now face flat or falling values combined with higher operating and compliance costs. The tax rise confirmed yesterday adds another line to the holding-cost calculation and will accelerate the sell-or-hold decision for personal-name investors in lower-yielding markets.
The regional dimension matters. In the north of England and the Midlands, gross yields of 7% to 9% or more are available at acquisition prices well below the London market. A higher-rate landlord investing in Nottingham, Sheffield or Bradford generates more income to offset the tax than one running a smaller portfolio at 3% gross yield in south-west London. The Budget reinforces the case for higher-yield northern assets, particularly inside a company structure where the 25% corporation tax rate applies.
The Risks Investors Need to Understand
The obvious response to the tax rise is incorporation, but incorporation has its own costs and risks that need modelling carefully before acting.
Transferring existing properties from personal ownership to a limited company triggers stamp duty land tax at the additional dwelling surcharge rate (5% on top of standard SDLT). On a portfolio of three properties worth £150,000 each in the Midlands, the SDLT cost of incorporation runs to roughly £12,000 to £15,000. On a portfolio of London flats at £400,000 each, the cost is substantially higher. Incorporation costs are a one-off outlay and the tax saving compounds year-on-year, but the payback period needs to be calculated on the actual portfolio, not a generic model.
The capital gains tax position at disposal also shifts. A limited company does not have the annual CGT exemption available to individuals (£3,000 for 2026-27). Corporation tax on company gains is 25%, the same as the corporate income tax rate. For investors planning to hold for five years or more and extract income, the company structure is clearly advantageous. For investors planning to sell within three years, the blended cost calculation needs more careful work.
Section 24, the restriction on mortgage interest relief for individual landlords, remains in place. This is the measure that treats mortgage interest as a 20% tax credit rather than a full deduction. Company landlords can still deduct mortgage interest as a business expense. The interaction between Section 24 and the new higher income tax rates means the effective rate of tax for higher-rate leveraged personal-name landlords is already substantially above the headline rates, and the Budget makes that position materially worse. A highly leveraged personal-name investor at higher rate will find the marginal return on a new property deeply negative after tax under the new rates.
For new purchases, buying through a limited company from April 2027 onwards is the clearer structure for most investors paying higher or additional rate tax. The complication arises for existing portfolios in personal names, where the transfer cost is a real number that needs calculating before committing to incorporation.
Where the Opportunity Could Be
The Budget outcome creates two distinct opportunities for investors thinking about structure before acting.
The first is about new acquisitions. Any new purchase from now should go through a limited company for most higher and additional-rate taxpayers. The SDLT cost on a new purchase through a company is identical to a personal-name purchase (the 5% surcharge applies in both cases), so there is no extra cost at the point of acquisition for new buys. There is no reason to add to a personal-name portfolio in the six months before April 2027 for a higher-rate taxpayer planning to hold long-term.
The second is an acquisition opportunity created by other people's responses to the Budget. The landlords most likely to sell in the next six months are personal-name investors with leveraged portfolios in lower-yield markets, mostly London and the South East, who can see that the post-April 2027 math does not work at current rents and financing costs. Some started that calculation before yesterday. The Budget has made the timeline more urgent.
For buyers using a limited company structure, acquiring from a personal-name seller in the next three to six months is tactically strong. The seller's motivation is real and time-bound. The buying structure is set up for a 25% tax rate from day one of ownership, rather than 44% or 49%. That is not a minor structural advantage on an investment expected to run for a decade.
The highest-yield markets remain in the North and Midlands. Birmingham, Nottingham, Sheffield, Bradford and Sunderland consistently appear in yield data above 6.5% gross for standard BTL, with HMO yields running considerably higher. A limited-company acquisition in these markets at 7.5% gross yield, financed at around 5.5% on a company BTL five-year fix, produces positive cashflow where a personal-name investor at the same rate and yield faces a very tight margin under April's new rates.
Arsh's Investor View
I will be direct. The Budget confirmed what I had been expecting since the 2025 Budget showed the direction of travel. Two percentage points in 2025, another two yesterday. The message from this government to unincorporated landlords is consistent, and it is not ambiguous.
What I find notable is that the Budget also confirmed no stamp duty changes and no CGT hike. That combination is actually good news for investors with the right structure. A limited-company buyer who acquires a property from a personal-name landlord in the next few months faces the same SDLT as anyone else, sells into a CGT regime unchanged from today, and gets taxed at 25% on rental profits rather than 44% or 49%. The Budget left those rates alone.
On the BTL losses figure: £1.15bn, up 32%, mostly London. I have been saying for two years that the best BTL investment is not in London. It is in Wolverhampton, Sheffield, Bradford, Nottingham and Birmingham, where acquisition prices are lower, yields are higher, and a 25% corporation tax rate on profits still makes the numbers work. The London landlord running a portfolio at 3% gross yield who faces 44% tax on that income is in a different position from a Midlands investor running 7.5% through a company.
The structural shift to company BTL has been happening gradually. Lendlord's Q3 2026 data showed 45% of new BTL purchases already going through companies. After yesterday, that number will be higher by the spring. New buyers should be doing the company calculation before any offer is made. Existing personal-name investors need to sit down with their accountant before April and understand the payback period on incorporation costs for their specific portfolio. There is still time to plan, but not much runway.
How Property Investor App Can Help
Property Investor App gives investors access to UK buy-to-let deals including direct landlord-to-landlord sales, where personal-name investors reassessing their positions after the Budget can be found before they list publicly. For investors setting up or expanding a limited company BTL portfolio, PIA's deal network covers the high-yield northern and Midlands markets where company-structure economics work most clearly. PIA's comparison tools allow investors to model current rent, gross yield, and net income under the April 2027 tax regime for both personal and company ownership structures before committing to a deal. Browse UK property investment opportunities on Property Investor App.
Key Takeaways
- Budget 2026 (28 October) confirmed a further two-percentage-point rise in property income tax from April 2027, adding to the two-point rise announced in the 2025 Budget. From 6 April 2027, individual landlords will be taxed at 24% (basic rate), 44% (higher rate) and 49% (additional rate) on rental profits.
- Company landlords are unaffected. A buy-to-let property held in a limited company continues to be taxed at corporation tax at 25%. For a higher-rate landlord, the gap between personal and company tax on rental profits is now 19 percentage points from April 2027. For additional-rate taxpayers, the gap is 24 points.
- HMRC data analysed by Bowmore Wealth Group: buy-to-let investors reported £1.15bn in losses on residential property sales in the past year, up 32% from £870m. The rise is concentrated in London and the South East, where flat or declining values have pushed some investors into loss-making sales.
- No changes to stamp duty, the 5% additional dwelling surcharge, or capital gains tax rates on residential property in this Budget. The SDLT cost of a new limited company purchase is identical to a personal-name purchase, so there is no extra acquisition cost for new company buys.
- Existing landlords in personal names face an incorporation decision. Transfer costs include SDLT at the surcharge rate, but the annual tax saving compounds. The payback period depends on portfolio size, yield and leverage. The calculation needs doing on the actual portfolio before April.
- For new purchases, the structure decision is settled for most higher and additional-rate taxpayers: buy through a limited company. The Budget has removed any remaining ambiguity about the direction of personal-name landlord taxation.
Frequently Asked Questions
What are the new property income tax rates from April 2027?
From 6 April 2027, individual landlords in England, Wales and Northern Ireland will pay income tax on their rental profits at 24% (basic rate), 44% (higher rate) or 49% (additional rate). These rates are four percentage points above the current standard income tax rates of 20%, 40% and 45%. The additional two percentage points above the 22%, 42% and 47% rates announced in the 2025 Budget were confirmed in the Autumn Budget on 28 October 2026. Company landlords pay corporation tax at 25% and are not affected.
Should I put my buy-to-let property in a limited company to avoid the April 2027 tax rise?
For most higher and additional-rate taxpayers acquiring new properties, buying through a limited company is now the clear structure. The SDLT cost at acquisition is the same as a personal purchase (the 5% additional-dwelling surcharge applies in both cases), and the annual tax rate on profits is 25% rather than 44% or 49%. For existing portfolios in personal names, transferring to a company triggers SDLT on the market value of the transferred properties. The payback period depends on portfolio value, yield and the annual tax saving. Work with an accountant who specialises in property portfolios before committing.
Does Budget 2026 change stamp duty for buy-to-let investors?
No. The Autumn Budget 2026 did not change stamp duty rates for buy-to-let investors. The 5% additional dwelling surcharge on second properties and investment property purchases remains in place. There were no changes to the existing SDLT threshold bands.
Why are buy-to-let investors reporting £1.15 billion in losses on property sales?
HMRC data analysed by Bowmore Wealth Group shows that buy-to-let investors reported £1.15bn in losses on residential property sales in the past year, up 32% from £870m the previous year. The rise is concentrated in London and the South East, where property values have stagnated or declined while operating costs, regulation and financing costs have risen. Investors who bought London properties at 2021 and 2022 prices and are now selling at lower values are crystallising capital losses. Northern and Midlands BTL investors, where acquisition prices are lower and yields higher, are generally in a different position.
How does Section 24 interact with the new property income tax rates from April 2027?
Section 24 limits mortgage interest relief for individual landlords to a 20% tax credit rather than a full deduction against rental income. From April 2027, income tax on rental profits rises to 44% or 49% for higher and additional-rate taxpayers. The combination means a highly leveraged personal-name investor at higher rate pays 44% on the gross profit that includes the mortgage payment, less a 20% credit on the interest. The net effective tax cost is substantially above the headline rate. Company landlords can still deduct mortgage interest as a full business expense, which is the primary driver of the company BTL tax advantage for leveraged investors.
