Portfolio landlords are being urged to review how their property investments are structured as upcoming tax changes threaten to increase the financial burden on rental income.
Accountancy firm Price Bailey has warned that individual landlords face higher income tax liabilities from April 2027, when rates are due to rise by two percentage points across all bands. The changes will see the basic rate increase from 20% to 22%, the higher rate from 40% to 42%, and the additional rate from 45% to 47%.
The planned increase comes on top of a series of pressures already affecting the private rented sector, including restrictions on mortgage interest relief, higher stamp duty surcharges and additional regulatory requirements expected under the Renters’ Rights Act, which begins to take effect during 2026.
Price Bailey says the combined impact of tax and regulatory changes is pushing many portfolio landlords to reassess whether holding properties in personal ownership remains the most efficient structure.
FINANCIAL BURDEN
While finance cost relief will also increase from 20% to 22% under the planned tax changes, the firm says this would only partially offset the impact for landlords with mortgage borrowing.
Jon Chambers, Tax Director at Price Bailey, says many landlords are already reassessing their long-term investment strategies.
He adds: “We’re seeing portfolio landlords question more than ever whether individual ownership still makes sense. The 2% rise, due to come in next year, adds even more financial burden onto existing tax restrictions and regulatory costs coming this year, with many investors reaching tipping point.”
RESTRUCTURING OPPORTUNITIES
He says that while the increase in dividend tax for company directors will take effect earlier, from April 2026, corporate structures still provide more flexibility in how profits are extracted compared with personal ownership.
Price Bailey also points to the introduction of a cap on Business Property Relief from April 2026, which could affect succession planning for some landlords and further encourage a review of ownership arrangements.
According to the firm, landlords who assess their portfolios and structures sooner will have more options available before the 2027 tax changes come into force.
Chambers says: “Landlords can navigate this successfully but waiting until April 2027 means missing restructuring opportunities. Early action is the best step landlords can make to strengthen their position going into the next financial year.”
