Budget Summary- Tax on Property Income

Landlords running unincorporated property businesses have once again been hit by tax changes. This time, the assault comes in the form of a new tax rate for property income. The new rate will be two percentage points higher than the standard income tax rates. The property tax rates will apply from 6 April 2027. From that date, property income will be taxed at 22% where it falls in the basic rate band, at 42% where it falls in the higher rate band and at 47% where it falls within the additional rate band.

The £1,000 property income allowance remains unchanged. Individuals letting furnished accommodation in their home will continue to benefit from the rent-a-room scheme to earn up to £7,5000 a year tax-free.