Section 24 and income

Buy-to-let tax changes explained: 2016 to 2028

A timeline of landlord tax changes since 2016: the SDLT surcharge, Section 24, CGT rates, 60-day reporting, FHL abolition, Making Tax Digital and the 2027 property income rates.

25 October 2026

Since 2016 landlords have faced a surcharge on buying, a cap on mortgage interest relief, higher tax on selling, faster reporting and the end of the holiday let regime, with higher property income tax rates due in April 2027. This article sets out the main changes in date order, and what each means now.

The timeline

Date	Change	What it means now
1 April 2016	3% SDLT surcharge on additional properties	Now 5%
6 April 2016	Wear and tear allowance replaced by relief for actual replacements	Claim like-for-like costs only
2017/18 to 2020/21	Section 24 phased in	No interest deduction; 20% credit
6 April 2020	Final period of private residence relief cut to 9 months	Lettings relief limited to shared occupation
6 April 2020 / 27 Oct 2021	30-day CGT return, extended to 60 days	60 days from completion
6 April 2024	Higher CGT rate on residential property cut from 28% to 24%	18% and 24%
31 Oct 2024	SDLT surcharge rises from 3% to 5%	5% on top of standard rates
1 April 2025	SDLT nil-rate band reverts to £125,000	0% on the first £125,000
6 April 2025	Furnished holiday lets regime abolished	Taxed like other lets
6 April 2026	Making Tax Digital for income above £50,000	Quarterly updates
6 April 2027	Property income rates 22%, 42%, 47%; MTD at £30,000	Credit rises to 22%
6 April 2028	MTD at £20,000	More landlords in scope

Buying: the SDLT surcharge

The surcharge started at 3% on 1 April 2016. It rose to 5% for transactions on or after 31 October 2024. It is added to every band, including the nil-rate band, so a £300,000 purchase by someone who already owns a property now costs £20,000: £5,000 at the standard rates and £15,000 for the surcharge. The same purchase cost £14,000 in 2016. The nil-rate band also fell back to £125,000 from 1 April 2025. See SDLT for property investors.

Holding: Section 24

Section 24 removed the deduction for mortgage interest in stages: 75% in 2017/18, 50% in 2018/19, 25% in 2019/20 and none from 2020/21. You get a 20% credit instead.

A higher-rate landlord with £20,000 of rent, £2,000 of other costs and £8,000 of interest paid £4,000 on £10,000 of profit before Section 24. In 2026/27 the tax on £18,000 is £7,200 less a £1,600 credit, which is £5,600. In 2027/28, with the 42% rate and 22% credit, it is £7,560 less £1,760, which is £5,800. This is an illustration, not a client example. See Section 24 and our mortgage interest article.

The £1,000 property allowance, introduced in 2017/18, remains an alternative to claiming expenses for landlords with very small rental income.

Selling: CGT and reporting

The residential rate was 28% for higher-rate taxpayers until it fell to 24% from 6 April 2024. The annual exempt amount has fallen to £3,000. Reporting has sped up: from April 2020 a UK resident had 30 days to report and pay, and from 27 October 2021 it is 60 days from completion.

Relief for letting also fell: the final period of private residence relief was cut to nine months from April 2020, and lettings relief now applies only where the owner shared the home with the tenant. See capital gains tax on rental property.

Holiday lets

The furnished holiday lettings regime ended from 6 April 2025. Interest relief is now restricted, capital allowances stop for new spending, and BADR, rollover and gift relief no longer apply to new disposals, subject to transitional rules. See furnished holiday lets.

Making Tax Digital

Making Tax Digital for income tax applies to landlords by reference to gross property and self-employment income: above £50,000 from April 2026, above £30,000 from April 2027 and above £20,000 from April 2028. Quarterly updates are sent through software. Property held in a company is outside it.

April 2027: new property income rates

Finance Act 2026 sets property income rates of 22%, 42% and 47% from 6 April 2027. The Section 24 credit rises to 22%. Property income will also be taxed after your other income, so your allowances are used against salary or pensions first. Companies are not affected.

What to do with all this

Check your structure against today's rules. A set-up that worked in 2015 may not now.
Model April 2027. Our Section 24 calculator shows the effect.
Keep records for sales. Costs, improvements and valuations all matter for the 60-day return.
Plan before you buy or sell. SDLT, CGT and timing are all decided at the start.

Common misunderstandings

"Section 24 only affects higher-rate landlords." It affects anyone whose taxable income goes over a threshold once interest is added back.
"The 60-day rule applies to all sales." It applies to UK residents selling UK residential property where tax is due. Non-residents have to report every disposal of UK property.
"The 5% surcharge only applies to buy-to-lets." It applies to any additional residential purchase by an individual, including a second home.
"Holiday lets are still special." Not since April 2025.
"A company avoids all the changes." It avoids Section 24 and the 2027 property income rates, but not the SDLT surcharge, and getting profits out is taxed again.

How the changes add up

Taken together, the changes mean that the tax cost of owning a mortgaged property personally has risen at each stage, and the tax cost of moving or selling one has risen too. A landlord who bought in 2014 might have paid no surcharge, deducted all of the interest and reported a sale on the tax return. The same purchase today attracts a 5% surcharge and no interest deduction, and a sale needs a return within 60 days. That is why many landlords now review ownership before they buy again, whether through a company, a spouse or a different mix of properties. The right answer depends on income, borrowing and succession plans, not on the headline.

Talk to us

If you are not sure how the changes affect your portfolio, book a call. We will review your position on a fixed fee agreed upfront.

This article is general information, not advice. Tax rules change and their effect depends on your circumstances. Please speak to us before acting.

FAQs

Frequently asked questions

What was the biggest tax change for landlords since 2016?

For most mortgaged landlords it is Section 24, which replaced the deduction for mortgage interest with a basic rate credit. It was phased in between 2017/18 and 2020/21. For higher-rate landlords it can double the effective tax on rental profit. The SDLT surcharge and the end of the holiday let regime matter more to those buying or holding furnished holiday lets.

How much has the SDLT surcharge on additional properties risen?

It was introduced at 3% from 1 April 2016 and rose to 5% for purchases with an effective date on or after 31 October 2024. It is charged on the whole price, on top of the standard rates. On a £300,000 purchase the SDLT went from about £14,000 in 2016 to £20,000 now. The surcharge can be reclaimed when replacing a main home, if the old one is sold within 36 months.

When did the CGT rates for residential property change?

In April 2016 the rates on residential property stayed at 18% and 28%, while the rates for most other assets were cut to 10% and 20%. From 6 April 2024, the higher rate on residential property was cut to 24%. In 2026/27 gains are taxed at 18% within your basic rate band and 24% above it, after a £3,000 annual exempt amount.

Why do I now have to report property sales within 60 days?

HMRC wanted payment sooner than the self assessment deadline. A 30-day report-and-pay rule was introduced from April 2020 for UK residents selling UK residential property, and the deadline was extended to 60 days for completions from 27 October 2021. If you are UK resident and the gain produces tax, you must report and pay within 60 days of completion.

What happened to the wear and tear allowance?

It was abolished from April 2016, which is also when replacement of domestic items relief started. The old allowance gave furnished landlords a flat deduction of 10% of net rent. Now you can claim only for the actual cost of replacing items such as a cooker or a bed, on a like-for-like basis, and not for the first purchase.

Do I need to use Making Tax Digital as a landlord?

If your gross property and self-employment income is above £50,000 you must use it from April 2026, above £30,000 from April 2027 and above £20,000 from April 2028. The test is gross rent before expenses, not profit. You submit quarterly updates through software and a final declaration. Income from properties held in a company doesn't count.

What changes for landlords in April 2027?

Property income will be taxed at 22%, 42% and 47% in England, Wales and Northern Ireland, instead of 20%, 40% and 45%. The Section 24 credit rises to 22%. Property income will also be treated as the top slice of your non-savings income, so allowances are used against salary and pension first. Companies are not affected.

Are more changes likely?

Probably. Landlord taxation has changed almost every Budget since 2015, and the 2027 changes are only the latest. The practical response is not to guess but to build a structure that still makes sense under several outcomes, and to check it each year. Anything announced but not yet legislated should be treated as a risk, not a certainty.

Related advice

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