- Accounts submitted to HMRC & Companies House
Next Phase Property Tax Planning | Free guide, 2026/27 edition
Property Tax Planning Guide for Landlords: Keep, Sell or Pass On
This free guide helps established UK landlords decide which properties to keep, sell or pass on before the enacted April 2027 changes. It explains the new 22%, 42% and 47% property income rates, capital gains tax when you sell a buy-to-let, and inheritance tax on property and pensions, using worked examples with the numbers shown.
Download the free guideWhat changes for landlords on 6 April 2027?
From 6 April 2027, rental profits are taxed at separate property income rates, mortgage interest relief rises to 22%, and most unused pensions count towards your estate for inheritance tax. These changes are law under the Finance Act 2026, not proposals.
| Rule | 2026/27 (now) | From 6 April 2027 | Status |
|---|---|---|---|
| Property income, basic rate | 20% | 22% | Enacted |
| Property income, higher rate | 40% | 42% | Enacted |
| Property income, additional rate | 45% | 47% | Enacted |
| Mortgage interest (finance cost) relief | 20% tax reduction | 22% tax reduction | Enacted |
| Personal allowance | Can shelter rent | Set against salary and pension income first | Enacted |
| Savings income (UK-wide) | 20% / 40% / 45% | 22% / 42% / 47% | Enacted |
| Unused pensions and death benefits | Usually outside the estate | Most count for inheritance tax | Enacted |
The property income rates apply in England, Wales and Northern Ireland; Scottish taxpayers keep Scottish income tax rates on property income. Sources: HMRC policy paper on property, savings and dividend rates; HMRC policy paper on inheritance tax and pensions.
Why this matters now: the numbers
59Median age of a landlord in England; 64% are 55 or over (MHCLG English Private Landlord Survey 2024)
31%Of landlords plan to reduce their portfolio within the next 2 years, compared to just 16% in 2018 (same survey)
£1,400Average UK monthly private rent in August 2026, up 3.8% in a year (ONS)
£24.2bnRecord capital gains tax liabilities in 2024/25, from 584,000 taxpayers (HMRC)
Inheritance tax receipts (£bn) and the extra tax from pensions
20/21
21/22
22/23
23/24
24/25
25/26
Cash collected each financial year. Source: HMRC tax receipts bulletin.
2026/27
2027/28
2028/29
Forecast extra IHT from bringing pensions into the estate, certified by the OBR. Source: HMRC policy paper.
Does paying capital gains tax on a sale end the tax?
Not always. Capital gains tax is charged on the gain when you sell. The cash you keep then sits in your estate, where inheritance tax can apply at 40% on death once the nil-rate bands, exemptions and reliefs are used. They are separate taxes, charged at different times.
Worked example: Margaret sells her portfolio, then dies after April 2027
| Step | Figure |
|---|---|
| Gain on five buy-to-lets worth £1.5m (cost £600,000) | £900,000 |
| Capital gains tax: (£900,000 − £3,000) × 24% | £215,280 |
| Estate on death: cash + £500,000 home + £300,000 pension | £2,084,720 |
| Residence nil-rate band after the £2m taper | £132,640 |
| Inheritance tax: (£2,084,720 − £325,000 − £132,640) × 40% | £650,832 |
| Total capital gains tax and inheritance tax | £866,112 |
Assumptions: widowed; home passes to her children; her late husband's bands are not available; whole gain taxed at 24%; illustrative only. Had she died before April 2027, her pension would have been outside the estate and inheritance tax would have been £513,888.
How will pensions affect inheritance tax from April 2027?
For deaths on or after 6 April 2027, most unused pension funds and pension death benefits count towards the estate, and towards the £2m residence nil-rate band taper. Death-in-service benefits from registered schemes are excluded. HMRC estimates about 38,500 estates will pay more in 2027/28, by around £34,000 on average.
Worked example: Graham and Linda
| How it is worked out | Before 6 April 2027 | After 6 April 2027 |
|---|---|---|
| Home, portfolio equity, cash and ISAs | £1,900,000 | £1,900,000 |
| Unused pensions | Outside the estate | £500,000 |
| Less nil-rate bands (2 × £325,000) | (£650,000) | (£650,000) |
| Less residence nil-rate bands, after taper | (£350,000) | (£150,000) |
| Taxable estate | £900,000 | £1,600,000 |
| Inheritance tax at 40% | £360,000 | £640,000 |
Assumptions: everything passes to the survivor first, then to their children; the home passes to direct descendants; both spouses' bands are transferable. The £2.4m estate loses (£2.4m − £2m) ÷ 2 = £200,000 of residence band.
What happens to assets your executors cannot find?
Your family can only inherit what your executors know about. The Pensions Policy Institute estimates 3.3 million lost pension pots worth £31.1bn. From April 2027, if a pension is found after HMRC has cleared the estate, the pension beneficiaries become liable for the inheritance tax on it.
| Assets Eileen never listed | Value | Family receives if listed | If never found |
|---|---|---|---|
| Old savings account | £38,000 | £22,800 | £0 |
| 1990s workplace pension | £62,000 | £37,200 | £0 |
| Premium Bonds and prizes | £15,000 | £9,000 | £0 |
| Half share of her late brother's flat, never registered | £110,000 | £66,000 | £0 |
| Total | £225,000 | £135,000 | £0 |
Illustrative example; the estate is already above all tax-free bands, so found assets bear 40% inheritance tax. Free tracing tools: the government Pension Tracing Service, My Lost Account and NS&I tracing.
What is law, and what is only speculation?
| Item | Status on 27 September 2026 |
|---|---|
| Property income 22% / 42% / 47% from 6 April 2027 | Enacted Finance Act 2026 |
| Pensions within inheritance tax from 6 April 2027 | Enacted Finance Act 2026 |
| Nil-rate band £325,000 and residence band £175,000 frozen to April 2031 | Announced Budget 2025 |
| Capital gains tax on residential property: 18% / 24%, £3,000 exemption | Current rule GOV.UK |
| Capital gains tax aligned with income tax rates | Scenario only Not announced |
Who is this guide for?
- Landlords who have owned property for 10 years or more, personally, jointly or through a company
- Owners thinking about selling some or all of a portfolio, or releasing cash for retirement
- Families who want property and pensions to pass on with as little avoidable tax as possible
What's inside
- 24 worked examples with the assumptions shown
- Own and Grow: spouse transfers, the £100,000 income trap, companies and refinancing
- Exit: selling the right property first and the 60-day capital gains tax rule
- Pass On: pensions, lifetime gifts, lasting powers of attorney and unclaimed assets
- A 13-question scorecard, a portfolio decision matrix and a 90-day plan
Download the free guide
Enter your details and we'll send you the PDF guide, Next Phase Property Tax Planning (2026/27 edition).
Your next step
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Frequently asked questions
Do the new 22%, 42% and 47% rates apply to limited companies?
No. Company rental profits pay corporation tax at 19% to 25%. Profits you take out as dividends are taxed at 10.75%, 35.75% or 39.35% from April 2026, so extraction still needs planning.
When do pensions become subject to inheritance tax?
For deaths on or after 6 April 2027. Most unused pension funds and death benefits are included; death-in-service benefits from registered schemes are excluded. Personal representatives report and pay the tax.
Is capital gains tax on buy-to-let property changing?
Current rates are 18% within your unused basic-rate band and 24% above it, with a £3,000 annual exempt amount. Aligning capital gains tax with income tax has been discussed but has not been announced.
Can a married couple pass on £1 million free of inheritance tax?
Up to £1 million may be available where both partners' full nil-rate and residence bands are transferable, a qualifying home passes to direct descendants, and the residence band is not tapered. Buy-to-let property does not qualify as the residence.
When must I report capital gains tax after selling a UK property?
UK residents must report and pay within 60 days of completion where tax is due on UK residential property. Non-UK residents must report every UK property disposal within 60 days, even if no tax is due.
Related help
Property tax advice | Landlord accountants | Capital gains tax calculator | Inheritance tax calculator
Written and reviewed by Simon Misiewicz FCCA, ATT, MBA, Director of Optimise Accountants, who has invested in property since 2006. Reviewed 27 September 2026. Figures were checked against HMRC, GOV.UK, ONS and OBR sources on that date; the page will be reviewed again after the Autumn Budget on 28 October 2026.
Optimise Accountants Limited, company number 04856185, Office 15 Bramley House 2a, Bramley Road, Long Eaton, Nottinghamshire NG10 3SX. Telephone 0115 939 4606.
This page is general information, not personal tax, legal or investment advice. Examples are illustrative and simplified. Tax outcomes depend on your circumstances and cannot be guaranteed.
