Buy-to-Let Tax in 2026: The Rules Every Landlord Needs to Get Straight

Being a landlord in the UK now means juggling digital record-keeping rules, a higher stamp duty surcharge, and capital gains tax bands that all shifted within the last two years. If you own rental property, here's the current state of play in one place.

Making Tax Digital arrives for bigger landlords

From April 2026, Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) became mandatory for landlords (and self-employed people) with gross annual income from property or self-employment over £50,000. That means quarterly digital updates through MTD-compatible software instead of one annual return, plus a final declaration at year-end. The threshold drops to £30,000 from April 2027, and £20,000 from April 2028, pulling in progressively smaller landlords over time.

Buying costs: the stamp duty surcharge

The additional-dwellings Stamp Duty Land Tax (SDLT) surcharge — charged on top of standard rates when buying a second home or investment property — rose from 3 percentage points to 5 percentage points from 31 October 2024, and has stayed at that higher level through 2026. Separately, the standard SDLT nil-rate band (the amount you can pay before any standard SDLT is due, before the surcharge is added) fell from £250,000 to £125,000 from 1 April 2025 — meaning most landlord purchases now attract more standard SDLT before the surcharge is even added on top.

Selling: capital gains tax

When you sell a rental property at a profit, residential property gains are taxed at 18% within the basic rate band and 24% above it — lower than the rates that applied to some other assets in past years, but still a meaningful bill to plan for, especially combined with the loss of lettings relief for most landlords in recent years.

Running costs: what you can still deduct

Landlords can still deduct the cost of replacing moveable furniture, appliances, and furnishings from rental income before tax under Replacement of Domestic Items Relief — covering things like replacing a worn sofa or a broken washing machine, though not the cost of the very first purchase when furnishing a property from scratch.

Checklist for landlords

• Add up your gross rental and self-employment income to check whether you cross the £50,000 MTD threshold this year, or the £30,000/£20,000 thresholds coming in 2027/2028.
• Get MTD-compatible software in place before your next filing period if you're near the threshold — don't wait for the deadline itself.
• Budget for the 5-point SDLT surcharge and reduced nil-rate band when working out the true cost of your next purchase.
• Model your CGT liability before selling, factoring in the 18%/24% split across your basic and higher-rate bands.
• Keep receipts for replacement furnishings — Replacement of Domestic Items Relief only covers genuine like-for-like replacements, not new furnishing costs.
• Speak to an accountant about incorporating if you own multiple properties — the tax treatment for companies differs meaningfully from personal ownership and is worth modelling explicitly.

How other countries compare

The US allows rental property owners to depreciate a residential building's value over 27.5 years as a tax deduction against rental income, a relief with no direct UK equivalent for individual landlords. Australia's negative gearing rules let landlords offset rental losses against other income, a more generous position than the UK's current mortgage interest relief (now limited to a basic-rate tax credit rather than a full deduction) for higher-rate taxpayers.

Key Numbers

• £50,000 — MTD for ITSA threshold from April 2026
• 5 percentage points — SDLT additional-dwellings surcharge
• 18% / 24% — CGT rates on residential property gains

Sources

• Buy-to-Let Landlord Tax Changes 2026 — Landlord Studio
• Buy to Let Tax Changes 2026 — Accounting Firms

Educational content only — not financial advice.