Landlord tax in 2026: SDLT, CGT and the rental Income Tax rise to come

Here, we look at three taxes that landlords must pay: Stamp Duty Land Tax (SDLT), Capital Gains Tax (CGT) and, soon, a higher rate of Income Tax on property income.

Stamp Duty Land Tax

You pay SDLT when you buy a property in England. For 2026, the standard rates are:

• Up to £125,000 – 0%
• The next £125,000 – 2%
• The next £675,000 – 5%
• The next £575,000 – 10%
• Anything above £1.5 million – 12%

As for buying a second home or a buy-to-let property, you pay an extra 5% surcharge on top of each band. Here’s government info on residential property rates.

Capital Gains Tax

You pay Capital Gains Tax on the profit you make if you sell a rental property for more than you paid for it, provided the property is owned in your personal name rather than through a limited company.

Here are the tax rates, allowances and rules for 2026:

• Basic-rate taxpayers pay 18%
• Higher and additional-rate taxpayers pay 24%
• The tax-free allowance is £3,000 per individual per year
• You can deduct allowable original purchase costs – including Stamp Duty and estate agent fees – from your overall profit

You need to report and pay any Capital Gains Tax to HMRC within 60 days of completing the property sale.

Note: If you hold properties through a limited company, you must pay Corporation Tax on the gain instead of Capital Gains Tax. You might want to talk to an accountant about the right approach for you. Some people pay a lower rate for Corporation Tax than Income Tax, and mortgage interest is fully deductible as a business expense. On the other hand, there are extra costs – including accountancy fees and company filing obligations – if you transfer existing properties into a company.

Here’s government info on Capital Gains Tax.

Income Tax on your rental profits

It’s official – the way landlord Income Tax works is going to change. Currently, profits from rental income are charged the same tax rate as the rest of your income (20% for the basic rate, 40% for the higher rate, and 45% for the additional rate).

From April 2027, separate Income Tax rates will apply to your rental profits, representing a 2% increase over standard Income Tax bands.

Here are the new property Income Tax rates:

• Basic rate: 22% (up from 20%)
• Higher rate: 42% (up from 40%)
• Additional rate: 47% (up from 45%)
• Finance cost relief will be provided at the separate property basic rate of 22%

The way people pay tax on their property, savings and dividend income will remain the same – it’s only the rates of tax charged that will change.

You can find more info on this government page.

And don’t forget the new rules for HMRC’s Making Tax Digital initiative. Making Tax Digital for landlords with a gross income (total rent before expenses) of over £50,000 a year started in April 2026, requiring landlords to keep digital records and send quarterly updates to the tax office. Landlords who earn less will need to follow the Making Tax Digital rules over the next couple of years. See more details on the government website.