Autumn Budget 2026: what landlords need to know

Chancellor John Healey's 2026 Autumn Budget introduced several measures affecting landlords, from higher income tax on rental profits to new payment schedules and Making Tax Digital changes.

Income tax on rental profits rises by four percentage points

From April 2027, income tax on property rental income will increase by a further two per cent on top of the two per cent already announced, bringing the total rise to four percentage points. Basic-rate taxpayer landlords will pay 24 per cent on their rental profits, higher-rate taxpayers 44 per cent, and additional-rate taxpayers 49 per cent. This applies to all UK landlords except those in Scotland, where devolved rates will be confirmed separately.

Making Tax Digital for Income Tax begins with penalty grace period

Landlords whose rental income exceeded £30,000 in the 2025/26 tax year will need to use Making Tax Digital for Income Tax from 6th April 2027, submitting quarterly updates through compatible software. HMRC confirmed that first-year users will not receive late filing penalties for their first four quarterly updates, though penalty points will still apply to those already using the system since April 2026. Landlords below the threshold remain outside the scope for now, though the government has signalled its intention to extend MTD more widely in future years.

Self Assessment payments to become smaller and more frequent

From April 2029, the lump-sum Payments on Account system will be replaced with smaller, more regular contributions throughout the year. The government says this will help landlords budget for their tax bills and reduce the risk of unexpected liabilities, though the exact payment schedule will be subject to consultation. Landlords currently making two large payments each January and July should prepare for this change as part of longer-term cash flow planning.

Direct Debit instructions to become mandatory for unpaid tax

Also from April 2029, landlords will be required to set up a Direct Debit instruction for VAT and PAYE liabilities, and it is likely this will extend to Income Tax liabilities under Self Assessment. You will not be forced to pay by Direct Debit if you settle bills on time by another method, but the instruction will be used to collect any unpaid balances automatically. This marks a shift towards more automated collection and underlines the importance of keeping payment details current with HMRC.

Business rates relief extended for landlords with commercial property

Landlords who own retail, hospitality or leisure premises in England will benefit from frozen business rates bills from April 2027 to April 2029, provided the property does not qualify for Small Business Rates Relief. The threshold for full relief has been raised from £12,000 to £18,000 rateable value, with tapered relief now available up to £21,000. These measures do not apply to residential buy-to-let portfolios, but landlords with mixed or commercial holdings should review their exposure and consider whether any properties now qualify for relief.