The Intermediary Mortgage Lenders Association says a higher-rate landlord with a £100,000 salary would face tax of 124 percent of rental profit from 2027/28 under the Autumn Budget tax rise.
The trade body published fresh analysis on 11 November showing the Budget adds a further two percentage points to tax on rental income. Combined with the rise announced last year, basic, higher and additional rates on rental income reach 24 percent, 44 percent and 49 percent respectively from the 2027/28 tax year for properties held in personal names.
Landlords holding stock personally must now weigh thinner retained income against sale costs, finance costs and the widening saving from company ownership before the new rates apply. IMLA stresses the outcome turns on borrowing, yield and plans for capital growth rather than tax alone.
Higher rates bite from 2027/28
IMLA modelled a £250,000 property with a £150,000 mortgage producing £4,365 of annual rental profit before tax. A higher-rate taxpayer below the personal allowance withdrawal threshold would pay about 74 percent of that profit in tax from 2027/28, while an additional-rate taxpayer earning more than £130,000 would pay about 86 percent.
The sharpest result falls on landlords with income between £100,000 and £125,140, where the personal allowance tapers away. In IMLA’s example of a landlord on a £100,000 salary, tax linked to the rental profit hits about 124 percent of that profit in 2027/28, leaving the letting loss-making after tax.
The increases do not apply to rental profits inside limited companies, which remain subject to Corporation Tax. That split is central to the choices landlords now face.
Incorporation gap widens for landlords
IMLA said the changes widen the difference in tax treatment between personal and corporate ownership and could speed the established move towards company structures. Some landlords may look at selling a personally held property and buying the next one through a company rather than transferring stock.
The report cautions that a direct transfer into a company triggers stamp duty and possible Capital Gains Tax. Those upfront charges mean incorporation does not suit every portfolio, particularly where equity is high or ownership is longstanding.
This follows Landlord Knowledge’s report on the NRLA campaign urging landlords to lobby MPs over the rental tax raid, which found growing anger that the previous increase had yet to take effect before ministers added a further rise. The latest figures suggest that pressure is shifting from protest towards concrete sale and restructuring plans.
Tenant supply faces fresh pressure
IMLA said reduced rental income does not automatically mean sales. Decisions will also reflect borrowing levels, local yields, views on house price growth, investment timescales and the tax cost of disposal.
Even so, the supply risk is material because individual landlords still account for 81 percent of tenancies in the English Private Landlord Survey 2024. IMLA also points to a fall of 157,000 in mortgaged buy-to-let properties between November 2022 and August 2026.
Where private landlords sell, some homes will be bought by other landlords for corporate portfolios. IMLA said the net effect on rented stock remains uncertain. If this trend continues, more lower-yield stock held personally looks likely to move into companies or leave the sector by 2028, a point echoed in recent warnings that retiree landlords face a £36,000 tax hit that could cut investment in upkeep.
What this means for landlords
- If you hold in personal names: model 24, 44 and 49 percent rates from 2027/28 against your salary band, including the £100,000 to £125,140 taper trap.
- Watch for: transfer costs before acting – stamp duty, Capital Gains Tax and mortgage exit fees can outweigh the Corporation Tax saving.
- Bottom line: decide now whether to hold for growth, restructure future buys or sell, rather than waiting for the first higher bill.
Editor’s view
The numbers are stark because they turn a profit into a loss after tax for some earners. Ministers cannot bank on landlords absorbing a second rise while also funding repairs and tougher standards. Expect more sales, more companies and more rent pressure until policy offers a stable path.
Author: Editorial Team – UK landlord & buy-to-let news, policy, and finance
Published: 11 November 2026
Sources: Intermediary Mortgage Lenders Association
Related reading: NRLA urges landlords to lobby MPs over rental tax raid
