There are two changes that will impact many landlords in the coming year.
1. Landlords with a turnover of more than £50,000 need to comply with Making Tax Digital (MTD) rules
If your gross annual business or property income is more than £50,000, you must be registered with Making Tax Digital.
That means you have to record and store your income and expenses digitally, and send quarterly updates and your annual return to HMRC via MTD compatible software.
If you haven’t yet signed up and begun using MTD, here are the three things you need to do now as this began on 6 April:
• Check if you need to use the service.
• Choose the most appropriate compatible software for your property business.
• Sign up for MTD online.
2. The minimum wage is increasing
From 1st April, the minimum wage has risen:
• National Living Wage (21+): a 50p per hour (4.1%) increase, to £12.71
• Rate for 18-20-year olds: an 85p per hour (8.5%) increase, to £10.85
This should help contract holders on lower incomes afford their rent and support rent increases and may also reduce the likelihood of contract holders falling into arrears.
Tax changes from 2027
While there are no other changes taking effect for this tax year, the government has already made announcements regarding future changes. Here are three things that landlords should be aware of and preparing for:
1. Tax on rental income is rising by 2% from April 2027
Tax on income from property (and savings) is increasing for all bands. The new tax rates for rental income will be:
• Basic rate: 22%
• Higher rate: 42%
• Additional rate: 47%
It’s worth checking now how this is going to affect your profits, and how much more of your rental income you will need to set aside to cover your tax bill. Also, if you haven’t increased your contract holder’s rent in the last year, it might be worth checking current market rates and consider raising it accordingly, ideally is small increments.
2. MTD will apply to those with property or business income of more than £30,000
Those earning between £30,000 and £50,000 will have to comply with MTD from 6 April 2027 but can sign up and begin using the service voluntarily now.
Although there are plans to expand the requirement to those with income over £20,000 from 2028, this legislation has not yet been introduced.
3. ‘Mansion tax’ will apply to properties worth £2m+ in 2026, with payments starting in 2028 (England only)
This is something that wealthier landlords and particularly those with properties in London and other prime market areas of England need to know about and plan for.
If a property is valued at more than £2 million this year (2026), a new High Value Council Tax Surcharge – known widely as ‘mansion tax’ will apply. It will start to be collected, alongside council tax, from 2028 and revaluations will be carried out every five years. The starting rates are:
Property value Annual charge
£2m - £2.5m £2,500
£2.5m - £3.5m £3,500
£3.5m - £5m £5,000
Over £5m £7,500
Realistically, if you can afford to have properties that are eligible for mansion tax, these extra charges shouldn’t worry you too much. However, if you let property worth more than £2m and have long-term contract holders that are responsible for paying the council tax, we’d suggest it would be good practice to remind them of the surcharge that will apply in two years’ time.
