Major tax changes are due to take effect from 6 April 2027, affecting property income, savings, Cash ISAs and the Inheritance Tax treatment of pensions.
For landlords and property investors in London, the most significant change is the introduction of separate Income Tax rates specifically for property income.
Savers and people planning how to pass wealth to future generations will also need to understand changes to savings taxation, Cash ISA allowances and pensions.
Here is what is changing and what London landlords should be aware of before April 2027.
Property Income Tax Rates Will Increase From April 2027
From 6 April 2027, separate Income Tax rates will apply to property income in England, Wales and Northern Ireland.
The new rates will be:
- Property basic rate: 22%, up from the current 20%
- Property higher rate: 42%, up from 40%
- Property additional rate: 47%, up from 45%
The changes apply to individuals receiving property income, including many private landlords. HMRC says the purpose of introducing separate property income rates is to narrow the difference between the taxation of earnings from work and income generated from assets.
For a London landlord with significant rental income, even a two-percentage-point increase could affect the property’s annual net return.
It therefore becomes increasingly important to look beyond the headline monthly rent and understand the net income remaining after tax, mortgage costs, maintenance, management and other property expenses.
What About Mortgage Interest Relief?
There is another point that landlords with residential mortgages should be aware of.
HMRC has confirmed that relief for residential finance costs will be calculated using the new 22% property basic rate from April 2027. The existing property allowance and Rent a Room Scheme are otherwise unchanged under these reforms.
Landlords with borrowing should therefore review their expected financing costs and projected net rental income before the new tax year begins.
For individual circumstances, professional tax advice should be obtained from a qualified accountant or tax adviser.
Savings Income Tax Is Also Increasing
The tax rates applying to savings income will also rise by two percentage points from 6 April 2027.
The new savings rates will be:
22% basic rate, 42% higher rate and 47% additional rate.
Unlike the property income changes, the new savings rates will apply across the UK.
Importantly, HMRC says the existing Personal Savings Allowance and starting rate for savings will remain in place.
For landlords keeping substantial rental profits or cash reserves in interest-paying accounts, the change could increase the amount of tax payable on savings interest that falls outside available allowances and tax-free accounts.
Cash ISA Limit Will Fall to £12,000 for Under-65s
Another significant change concerns Cash ISAs.
From 6 April 2027, people aged under 65 will be able to contribute a maximum of £12,000 per tax year into Cash ISAs, down from the current £20,000 limit.
However, the overall annual ISA allowance will remain at £20,000.
People aged 65 or over will continue to have a £20,000 annual Cash ISA limit. HMRC formally published details of the new rules in September 2026.
For example, an eligible saver under 65 could potentially place £12,000 into a Cash ISA and use the remaining part of their £20,000 overall ISA allowance for qualifying non-cash ISA investments, subject to the relevant ISA rules.
This reform is particularly relevant to landlords and property investors who maintain substantial cash reserves for deposits, refurbishment, maintenance or future property purchases.
Pensions Will Enter the Inheritance Tax Estate
One of the most significant estate-planning changes will also begin on 6 April 2027.
Most unused pension funds and pension death benefits will be brought within the value of a deceased person’s estate for Inheritance Tax purposes for deaths occurring on or after this date.
The reform was legislated through the Finance Act 2026.
This could be particularly important for property owners who already have substantial estates consisting of homes, investment properties, savings and other assets.
HMRC estimates that approximately 38,500 estates could pay more Inheritance Tax as a result of the pension changes.
Among estates affected, HMRC estimates the average increase in Inheritance Tax liability at approximately £34,000. It is important to understand that this does not mean every estate will face an additional £34,000 tax bill. HMRC also expects most estates to continue having no Inheritance Tax liability after the reforms.
Certain pension benefits, including qualifying death-in-service benefits from registered pension schemes, are excluded from the new rules.
What Do the April 2027 Tax Changes Mean for London Landlords?
London landlords are already operating in a market where property prices, mortgage costs, maintenance expenditure, regulation and taxation can all influence profitability.
From April 2027, landlords operating personally rather than through a company will need to factor the new property income rates into their financial planning.
A landlord should increasingly look at the full picture:
Rental income → operating costs → finance costs → tax → actual net return.
A property generating a strong gross rent does not necessarily produce the same level of net profit once all expenses and tax liabilities are taken into account.
Landlords with larger portfolios may also want to review how the new rules interact with their wider financial arrangements, pensions and estate planning.
However, changing property ownership structures purely because tax rates have changed can itself have significant tax, mortgage and legal consequences. Any restructuring should therefore be reviewed with suitably qualified tax and legal professionals.
London Property Investment Remains About More Than Tax
Tax is an important part of property investment, but it is not the only consideration.
Rental demand, property location, achievable rent, tenant quality, maintenance expenditure, financing and long-term capital performance all contribute to whether a property investment works.
For London landlords, professional management can also help reduce the administrative burden involved in running rental property.
Prime Land Property provides lettings, property management, rent collection, maintenance support and Guaranteed Rent services to landlords across London, with more than 20 years of experience in the market.
Landlords can read more about our Landlord Services in London or explore our latest London property and landlord news.
Preparing for April 2027
The new rules do not take effect until 6 April 2027, giving landlords and savers time to understand how the changes may affect them.
For landlords, this is a good opportunity to review expected rental income, property expenses, mortgage costs and net returns for the next tax year.
For complex tax, pension or inheritance planning, landlords should speak directly with a qualified accountant, financial adviser or tax specialist.
For the official rules, see HMRC’s guidance covering property and savings Income Tax changes, Cash ISA reforms and Inheritance Tax on pensions.
Looking for Property Management in London?
If you own a rental property in Whitechapel, Stepney, Mile End, Bethnal Green, Shadwell or elsewhere in London, Prime Land Property can help with lettings and day-to-day property management.
Whether you own one rental property or a larger portfolio, speak to our team about how we can support your property.
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