Six Things UK Landlords Should Be Doing Before April 2027

Every week we have the same conversation. A landlord sits down with their figures and says some version of: "I thought I understood this, and then it changed again."

They're right. Property has been the most heavily legislated corner of the UK tax system for a decade. And the next change is already on the statute book: from April 2027, rental profits will be taxed on their own separate set of rates for the first time.

Here's what's coming, and the six things worth doing about it now.

What's actually changing

From April 2027, property income moves onto dedicated rates of 22% basic, 42% higher and 47% additional - two points up at every level. National Insurance on rental profits, widely feared before the Autumn Budget 2025, didn't happen.

There's a second element that gets less attention but matters just as much: personal allowances will be set against non-property income first, with only what remains available to cover rental profit. If you've been sheltering a modest rental profit inside unused personal allowance, model that again.

For a higher-rate landlord with £20,000 of rental profit, the rate change alone is roughly £400 a year. Not fatal on its own. But it lands on top of Section 24, thresholds frozen to 2031/32, and rising costs, and for a geared portfolio those effects compound.

1. Model the 2027 rates against your actual numbers

Not the headline. Your figures. The interaction between the new rates, the allowance change and your existing finance costs is specific to your portfolio, and the answer surprises people in both directions.

2. Understand what Section 24 is really doing to you

Since 2020, individual landlords haven't been able to deduct mortgage interest - you get a basic-rate tax reducer instead, currently 20% of finance costs.

The part people find hardest is that your taxable income is now calculated before interest. £30,000 of rents against £20,000 of interest means you declare £30,000, not £10,000. That inflated figure can push you into higher rates, trigger the High Income Child Benefit Charge, or restrict your personal allowance above £100,000 - all on profit you never saw.

From 2027/28 the reducer rises to 22%, tracking the new basic rate. Basic-rate landlords are broadly no worse off from that specific interaction; higher-rate landlords keep the same gap they have today.

3. If you're married, check how the income is split

This is the cheapest win available and it's constantly missed.

Income from jointly held property is automatically split 50:50 between spouses regardless of who actually owns what - unless you hold unequal beneficial interests and file a Form 17 declaration. Shifting income toward the lower earner can save more than incorporation, at a fraction of the cost.

The mechanics have to be right: the beneficial interest must genuinely be unequal, usually documented by a declaration of trust, and Form 17 must reach HMRC within 60 days. Get the order wrong and the election fails.

4. Don't incorporate on a headline rate

Sometimes it's the right answer. Often it isn't. Anyone who tells you confidently without seeing your numbers is selling something.

In favour: full deductibility of finance costs, corporation tax from 19%, and shares are far easier to pass down than bricks.

Against: transferring property is a disposal at market value, so CGT may bite at 18% or 24% unless incorporation relief applies. The company usually pays the 5% SDLT surcharge on the way in. Personal buy-to-let mortgages have to be replaced with commercial lending. And getting profits out means dividend tax, which rose in April 2026 to 10.75% and 35.75%.

It tends to work for higher-rate taxpayers with real gearing who intend to reinvest rather than draw income. It rarely works for a small portfolio with modest borrowing.

5. Sort your capital improvement records

Extensions, conversions and genuine improvements aren't deductible against rental income, but they add to your base cost and cut capital gains tax when you sell. With the annual exempt amount now just £3,000, down from £12,300 in 2022/23, almost the whole gain is in charge.

I've seen landlords pay thousands in unnecessary CGT because a decade of receipts went in the bin. Scan them.

And if you're even thinking about selling: CGT on residential property must be reported and paid within 60 days of completion, via a separate return. Tell your adviser before you instruct the agent, not after you exchange.

6. Get onto digital records early

Making Tax Digital went live in April 2026 for landlords with combined gross property and self-employment income over £50,000. The threshold drops to £30,000 in April 2027 and £20,000 in April 2028.

Note it's tested on gross income, not profit - £60,000 of rents and £5,000 of profit is in scope. A spreadsheet alone no longer works, because it can't submit to HMRC.

If you're below the threshold today, moving to digital records voluntarily and calmly is far more pleasant than doing it against a deadline.

Where this leaves you

Nearly every worthwhile decision here has to be made before a transaction, not while filing in January.

If you hold geared property personally, are weighing up incorporation, have never reviewed how income is split with your spouse, or are planning a disposal in the next 18 months - a conversation now will pay for itself several times over.

If you’d like a second pair of eyes on your current rental business structure and tax efficiencies, get in touch with Surrey Hills Tax - we’re happy to help.

This is general guidance rather than advice on your particular situation, and the rules have specific exceptions. If you would like us to check how your own-use figure is being calculated, or to look at whether the cash basis suits your business, please get in touch.