Individual landlords in the UK face effective tax rates on rental income that could reach 124% of rental profit for some earners from the 2027/28 tax year, according to analysis from the Intermediary Mortgage Lenders Association (IMLA) reported by Property Wire. The figure stems from a two percentage point increase in tax on rental income announced in the Autumn Budget, layered on top of a rise introduced the previous year.
Combined, the two increases will take the basic, higher and additional rates of tax on rental income to 24%, 44% and 49% respectively from 2027/28, per the IMLA analysis. Crucially, the increases apply only to individual landlords holding property in their own names. Landlords who hold property through limited companies remain subject to Corporation Tax instead, and are unaffected by the change.
How the numbers add up
IMLA's worked example, cited by Property Wire, examined a £250,000 property carrying a £150,000 mortgage and generating annual rental profit of £4,365 before tax. Under the new rates, a higher-rate taxpayer whose income sits below the personal allowance withdrawal threshold would pay approximately 74% of that profit in tax from 2027/28. An additional-rate taxpayer earning more than £130,000 would pay approximately 86%.
The effective rate rises further for landlords whose income falls between £100,000 and £125,140, a band where the personal allowance is progressively withdrawn. In IMLA's example of a landlord earning a £100,000 salary, the tax attributable to rental income would reach approximately 124% of rental profit in 2027/28 — meaning the tax bill on the rental income alone would exceed the profit it generates, once interaction with the personal allowance taper is factored in.
Source: IMLA analysis, as reported by Property Wire, as of 2026-11-11.
WPF analysis: the individual-versus-corporate ownership gap widens
World Property Forum analysis of the IMLA figures suggests the Budget changes meaningfully widen the tax treatment gap between individually held and corporately held rental property. Because company landlords continue to pay Corporation Tax rather than the new elevated rental-income rates, the relative advantage of incorporation grows larger the higher a landlord's personal income. For investors already weighing ownership structures, this is a case study in how tax policy can shift the calculus toward corporate vehicles even where the underlying asset and rental yield are unchanged — a theme explored more broadly in WPF's guide to property investment in low-tax jurisdictions, which contrasts jurisdictions by their treatment of rental income rather than headline asset prices.
IMLA itself was cautious about reading the shift as mechanical. Kate Davies, Executive Director of IMLA, said landlords "will respond differently to these changes, depending on their financial circumstances and what they want from their investment," adding that "some will continue to see a strong case for holding property over the long term, particularly where they anticipate capital growth." Davies also noted that company ownership "can suit investment strategies, particularly for those planning to pass properties to children," but that existing landlords weighing a switch must factor in stamp duty and potential Capital Gains Tax liabilities on any transfer or disposal.
Implications for rental supply and tenants
The scale of the shift matters because individual landlords are not a marginal part of the market. According to the English Private Landlord Survey 2024, individual landlords accounted for 81% of tenancies, meaning tax changes aimed at that cohort touch the large majority of the private rented sector rather than a small niche. IMLA's data also shows the number of mortgaged buy-to-let properties fell by 157,000 between November 2022 and August 2026.
IMLA was explicit that reduced rental income does not automatically translate into property sales. Landlord decisions will reflect borrowing levels, local rental yields, house price growth expectations, investment timescales, and the tax liabilities associated with disposing of a property — not the rental tax rate in isolation. Investors comparing UK buy-to-let against other jurisdictions may find it useful to weigh net rental returns using WPF's international rental yield comparison, which looks beyond headline yield figures to taxes and local costs that determine true profit.
Davies summarised the tenant-facing risk this way: "For tenants, the concern is whether enough suitable homes remain available where they need them and at rents they can afford," noting that "investment by both individual and corporate landlords contributes to that supply." IMLA added that the net effect on available rental stock remains uncertain, since properties sold by individual landlords may simply be acquired by other landlords adding to corporate portfolios.
Due-diligence questions for landlords weighing their options
For individual landlords assessing whether to hold, sell, or restructure ahead of the 2027/28 tax year, several questions follow directly from the IMLA analysis. First, where does an individual's total income — salary plus rental profit — fall relative to the £100,000 to £125,140 personal allowance taper band, since this is the range where IMLA found the effective rate on rental income climbing toward or past 100%? Second, what would the stamp duty and Capital Gains Tax cost be of transferring an existing property into a limited company structure, since IMLA flagged these as real costs of incorporation rather than a cost-free switch?
Third, landlords should ask what their realistic investment timescale is and what capital growth expectations underpin the decision to hold, since IMLA noted these factors — alongside borrowing levels and local rental yields — shape whether continued individual ownership still makes sense even at reduced after-tax income. Fourth, for landlords considering a sale, it is worth establishing who the likely buyer would be — another individual landlord or a corporate portfolio — since this affects whether the property remains in the rental stock at all, a point IMLA raised as a source of uncertainty for overall supply.
Limitations of the available evidence
The IMLA figures are illustrative examples built around a single property value (£250,000) and mortgage level (£150,000), not a representative sample of the UK buy-to-let stock, so the 74%, 86% and 124% figures will not apply uniformly across all landlords, property values or mortgage structures. IMLA's analysis also does not quantify how many landlords currently sit in the affected income bands, nor does it provide a forecast of how many will actually incorporate, sell, or hold. The claim that the net effect on rental stock is uncertain is IMLA's own assessment, not a resolved finding.
No data in the source addresses capital gains outcomes for landlords who sell now versus after the 2027/28 rate change, nor does it cover mortgage rate movements or regional variation in rental yields that would also factor into individual landlord decisions. Readers should treat the worked examples as scenario analysis from IMLA rather than a market-wide prediction.
What to watch next
The next milestones to track are the 2027/28 tax year implementation itself and any further guidance from HMRC on how the personal allowance taper interacts with rental income for affected landlords. Reported Property Wire coverage has also flagged an HMRC proposal for digital rent reporting for letting agents, a distinct regulatory development from the Budget tax rate changes covered here. Landlords and prospective buyers may also want to monitor incorporation volumes and mortgaged buy-to-let property counts in coming IMLA releases to see whether the 157,000 decline recorded since November 2022 continues.