What the April 2027 property tax rise means for an expat landlord

A rise that finds you wherever you live

If you left the United Kingdom but kept a flat or two let out behind you, something changes for you on 6 April 2027, and it changes whether you are in Dubai, Dublin or Marbella. From that date UK rental profit is taxed at its own set of rates, higher than the ones that applied to it before, and a quieter change to the way the tax is calculated takes away some of the shelter the personal allowance used to give it.

I have had a run of these conversations lately, usually opening with a version of the same line: I moved abroad years ago, the rent just ticks along, surely this does not affect me. It does. The United Kingdom taxes income from UK land wherever the landlord sits, and the new rates do not care about your tax residence. So the sensible thing is to understand what actually changes, confirm that it reaches you, and then decide whether the answer is to carry on as you are or to hold the property a different way.

This note sets out the three things that change on 6 April 2027, why they reach a landlord who has not lived in the UK for years, and the decision the rise sharpens rather than settles: keep the property in your own name, or move it into a company.

What actually changes on 6 April 2027

Three connected things take effect, all from Budget 2025 and legislated in Finance Act 2026.

The first is the headline. UK property income gets its own tax rates, two percentage points above the ordinary ones. The property basic rate becomes 22%, the property higher rate 42%, and the property additional rate 47%, for the 2027 to 2028 tax year onward. They apply across England, Wales and Northern Ireland, with Scotland and Wales to be given the power to set their own property rates in time. Savings income gets the same treatment; dividends were already increased a year earlier.

The second is a change to the income tax calculation that gets less attention and quietly matters more. Property income is moved in the running order so that it is taxed after employment, pension and trading income, but before savings and dividends. Alongside that, the personal allowance and other reliefs must now be set first against income that is not property, savings or dividend income, under the amended ordering rules in the Income Tax Act 2007.

The third is a mechanical knock-on. The relief a landlord gets for residential mortgage interest, which has for years been a basic-rate tax reduction rather than a deduction, is now given at the property basic rate of 22% instead of 20%. And the Non-Resident Landlord Scheme, which makes an agent or tenant withhold tax from rent paid to a landlord abroad, withholds at the property basic rate, so that rate rises to 22% too.

Why the re-ordering quietly matters

The rate rise is simple arithmetic. The re-ordering is where a landlord can be caught without noticing, so it is worth being plain about it.

Under the old rules the personal allowance could be used in whatever way reduced your bill the most, which often meant setting it against rental income. Under the new rules the allowance and other reliefs have to be used against your non-property, non-savings, non-dividend income first, and only the balance can fall on property income. If you have a UK salary, a UK pension or UK trading income, those use your allowance first, and your rental profit is left sitting on top, taxed at the new property rates from the first pound above whatever allowance is left.

For a landlord with no other UK income the allowance still lands on the rental profit, so the practical hit is the two-point rate rise rather than the re-ordering. For a landlord with a UK pension or other UK income, the re-ordering is the part that bites, because it strips the allowance away from the rent. The gov.uk worked example makes the order concrete: employment income takes the allowance first, then property income is taxed at 22% and up.

Does it reach a landlord in Dubai, Ireland or Spain

Yes, and this is the point most expat landlords get wrong. The United Kingdom asserts the right to tax income arising from UK land whoever owns it and wherever they live, so being non-resident does not take UK rent out of UK tax. It never did. What changes on 6 April 2027 is only the rate and the calculation, not the fact of the charge.

The Non-Resident Landlord Scheme is how the UK collects it at source from a landlord abroad: the letting agent, or the tenant where there is no agent, withholds tax from the rent unless the landlord has HMRC approval to receive it gross and file a return instead. Either way the new rates apply on the return, with credit for anything withheld, and where the country you now live in also taxes the rent, double tax relief may reduce the second charge. How that interacts with the UAE, which does not tax the rent at all, and with Ireland or Spain, which do, is a separate question that turns on the relevant treaty.

One nuance decides how hard the re-ordering hits a non-resident. Many non-residents keep the UK personal allowance, including British and European Economic Area nationals, so the allowance is still there; whether a particular non-resident gets it at all depends on nationality or a double tax treaty. But the new ordering means that allowance now shelters any other UK income first, so a non-resident whose only UK income is the rent keeps the allowance against it, while one with a UK pension alongside does not.

The company question, sharpened

For years the question for a UK landlord has been whether to hold property personally or through a company, and for years the honest answer has been that it depends. The April 2027 rise does not change that answer, but it moves the line, because it widens the gap between the personal rates on rental profit and the corporation tax a company pays.

A company does not pay the new property rates. It pays corporation tax on its rental profit, at 19% on profits up to GBP 50,000 and 25% above GBP 250,000, with a marginal band between the two, rates the government has held for the current Parliament. Against personal property rates that now reach 42% and 47%, that gap is the attraction.

Two further company features sharpen it. A company deducts its mortgage interest in full as a business expense, where an individual landlord only gets a 22% tax reduction on residential interest. And a company is outside Making Tax Digital for Income Tax, the quarterly digital-filing regime now rolling out to individual landlords, filing a corporation tax return instead, a point developed in the note on incorporating a UK property portfolio and the cost of leaving Making Tax Digital.

There is a catch inside the company rate that a landlord letting to family needs to know. A company that exists mainly to hold investments and lets its property only to persons connected with it is a close investment-holding company under section 18N of the Corporation Tax Act 2010, and it pays the 25% main rate on all its profit, with no access to the 19% rate. A company letting to unconnected tenants is not caught and keeps the lower rate. The structure that looks like a saving can lose it on who the tenants are.

Why incorporating is not a reflex

The gap in annual rates is real, but it is only one side of the ledger, and the other side is why incorporating is a decision rather than a default. Moving a property you already own into a company is a sale to the company at market value, and that sale has its own taxes.

It can trigger capital gains tax, now at up to 24% on residential property, on the gain since you bought it, payable even though no cash has changed hands. It triggers stamp duty land tax on the market value, including the surcharge that applies to residential property bought by a company, and a non-resident buyer surcharge on top. Incorporation relief, which can defer the capital gains tax, is only available where the lettings amount to a genuine business run with real time and effort, which a small passive portfolio usually is not.

High-value residential property held in a company can also fall within the annual ATED charge unless it is commercially let, an issue the note on the UK property envelope and its five taxpayers examines.

And the company rate is not the end of the story, because the money is then inside the company. Taking it out as a dividend is taxed again in your hands, at dividend rates that themselves rose from April 2026, so the headline corporation tax saving is partly given back on extraction. The company route works best where the profit is retained and reinvested, the portfolio is mortgaged, or the personal rates would be 42% or 47%; it works least well for a small, unmortgaged holding whose owner wants the income to live on.

Personal or company, side by side

The decision is easier to weigh with the two columns next to each other.

Read it as a whole rather than row by row. The company wins the annual-rate rows and loses the switching-cost and extraction rows, which is why the answer depends on the size of the portfolio, whether it is mortgaged, and whether the income is spent or rolled up.

The honest answer, and what to do before April 2027

The rise is not a reason to panic and it is not a reason to incorporate by Friday. It is a reason to do the arithmetic for your own portfolio before the new rates start, while there is time to act deliberately rather than in a rush.

For a landlord with one or two unmortgaged flats and no other UK income, the change is likely to be a modest rate rise absorbed on the usual return, and incorporating would cost more in transfer taxes than it saves.

For a higher-rate landlord with a mortgaged portfolio, or one with UK income that now uses up the allowance, the gap between a 42% or 47% personal rate and a corporate rate, with full interest relief inside the company, can be large enough to justify the one-off cost of moving, especially if the income is being reinvested rather than drawn. The company does not have to be a UK one, though a non-UK company holding UK residential property brings its own charges and does not escape UK tax, as the note on holding UK property through a UAE or offshore SPV sets out.

The work to do before 6 April 2027 is small and worth it: confirm the rent still reaches you under UK tax, check whether the re-ordering strips your allowance because of other UK income, and model the personal-versus-company position on your actual numbers, including the cost of getting there. That is a calculation to run once, carefully, not a headline to react to.

Frequently asked questions

What are the new UK property income tax rates from April 2027?

From 6 April 2027, UK property income is taxed at its own rates: a property basic rate of 22%, a property higher rate of 42%, and a property additional rate of 47%. These are two percentage points above the ordinary rates and were announced at Budget 2025 and legislated in Finance Act 2026. They apply to property income in England, Wales and Northern Ireland, with Scotland and Wales expected to gain the power to set their own property rates in due course. Savings income is taxed at the same new rates, and dividend rates rose separately from April 2026.

Do the new property tax rates apply to non-resident and expat landlords?

Yes. The UK taxes income from UK property whoever owns it and wherever they live, so a landlord in Dubai, Ireland or Spain is within the charge, and the new 22%, 42% and 47% rates apply to them from 6 April 2027. The Non-Resident Landlord Scheme, which withholds tax from rent paid to a landlord abroad, withholds at the property basic rate, which rises to 22%. The new rates apply on the Self Assessment return, with credit for any tax withheld, and double tax relief may be available where the country you live in also taxes the rent.

What is the change to the income tax calculation and why does it matter?

Alongside the new rates, the order of the income tax calculation changes. Property income is taxed after employment, pension and trading income but before savings and dividends, and the personal allowance and other reliefs must be set against non-property, non-savings, non-dividend income first. The effect is that if you have other UK income, such as a UK pension, your allowance is used against that first and your rental profit sits on top, taxed at the new property rates. A landlord whose only UK income is the rent still gets the allowance against it, so the re-ordering hits those with other UK income hardest.

How does the Non-Resident Landlord Scheme change in 2027?

The Non-Resident Landlord Scheme itself is unchanged in structure: a letting agent, or the tenant where there is no agent, withholds UK tax from rent paid to a landlord living abroad, unless HMRC has approved the landlord to receive rent gross and file a return. What changes from 6 April 2027 is the rate, which follows the property basic rate up from 20% to 22%. Landlords approved to receive rent gross still file and pay at the full new rates, with the higher and additional property rates applying to larger profits.

Should an expat landlord move UK property into a company?

It depends on the portfolio, and the April 2027 rise sharpens rather than settles the question. A company pays corporation tax of 19% to 25% instead of personal property rates of up to 47%, deducts mortgage interest in full, and is outside Making Tax Digital, which favours mortgaged or higher-income landlords who retain the profit. Against that, transferring existing property into a company triggers capital gains tax and stamp duty land tax with surcharges, incorporation relief rarely applies to a passive let, and extracting the money is taxed again as a dividend. The answer turns on your numbers, not the headline rate.

Will my UK rental company pay 19% corporation tax?

Only if it qualifies. A company pays 19% on profits up to GBP 50,000 and 25% above GBP 250,000, with marginal relief between, so a profitable portfolio reaches the higher rate anyway. There is also a trap for family arrangements: a company that mainly holds investments and lets its property only to persons connected with it is a close investment-holding company under section 18N of the Corporation Tax Act 2010 and pays the 25% rate on all its profit. A company letting to unconnected tenants keeps access to the lower rate.

Does holding UK property through a UAE or offshore company avoid UK tax?

No. UK rental income and gains on UK property remain within UK tax regardless of where the owning company is based, so a UAE, DIFC or offshore company holding UK residential property still pays UK tax on the rent and can face the ATED charge and non-resident capital gains tax as well. Using a non-UK company adds cost and complexity without removing the UK charge. The choice between a UK company and a non-UK one is about the wider structure and the owner's residence, not about escaping UK property tax.

What should I do before 6 April 2027?

Three things, none urgent but all worth doing before the rates change. Confirm that your UK rent is being taxed correctly under the Non-Resident Landlord Scheme or your gross-payment approval. Check whether the calculation re-ordering will strip your personal allowance because you have other UK income. And model the hold-personally-versus-company decision on your actual portfolio, including the capital gains tax and stamp duty land tax cost of transferring in and the tax on taking money out, so that if incorporation is right you do it deliberately rather than in a rush near the deadline.

---

Critical advisory. The April 2027 property tax rise is easy to dismiss from abroad and easy to over-react to. Both are mistakes. The rent is within UK tax wherever you live, the new 22%, 42% and 47% rates and the allowance re-ordering are real and dated, and they genuinely move the line on whether to hold property in your own name or through a company, without moving it to the same place for everyone. I spend a good part of the year running this exact calculation for landlords in the UAE, Ireland and Spain, and the ones who come out ahead are those who modelled their own numbers before the rates changed rather than after.

We look at the UK property position and the company and residence questions together, because for an expat landlord they are one decision. This note is general information rather than advice on your own portfolio, so take advice on the specifics before you act.