Since the Budget on 28 October, most of the talk about landlords has been about selling up or moving properties into a company. For the many landlords who are staying put, there is a simpler question with money attached to it right now: when should they spend money on their properties?
What changes in April 2027
Under the changes announced in the Budget, from 6 April 2027 rental profits will get their own Income Tax rates: 24% for basic rate taxpayers, 44% for higher rate and 49% for additional rate. In 2026/27, individual landlords in England, Wales and Northern Ireland generally pay Income Tax on taxable rental profits at 20%, 40% or 45%.
The new rates will apply in England, Wales and Northern Ireland. The Scottish Government sets its own rates, so landlords who are Scottish taxpayers should check the Scottish figures. The latest increase still needs legislation, so landlords should plan using the announced rates and check the final rules before acting. These are personal Income Tax changes, not Corporation Tax rates for property companies.
Most of the coverage has been about the extra tax on rents. The less obvious effect is that the running costs and repairs you can deduct become worth more as well, where the deduction reduces profits taxable at the new, higher rate. Mortgage interest is treated separately, under its own relief rules, so it does not follow the same pattern.
A worked example
Take an individual landlord using the cash basis who plans £5,000 of allowable repairs, such as replacing a worn kitchen with a broadly equivalent one. Assume the full deduction reduces profits taxed at 20% in 2026/27 or 24% in 2027/28, with no losses, finance cost relief restrictions or other interactions affecting the saving.
Paid between 6 April 2026 and 5 April 2027, the cost falls into the 2026/27 tax year and saves £1,000 of tax at 20%.
Paid between 6 April 2027 and 5 April 2028, it falls into 2027/28 and saves £1,200 at 24%.
The gap is £200 on a £5,000 job. Each of the 3 property rates is 4 percentage points above the corresponding 2026/27 rate. A higher rate landlord would therefore save £2,000 against £2,200 on the same assumptions. A £15,000 job could produce an extra £600 of relief if the full deduction falls within the corresponding rate band in each year.
That turns the usual year end advice around. Landlords are normally told to spend before 5 April to bring the tax saving forward. This time, waiting until the new tax year could mean a bigger saving. However, the relief relates to a later tax year, and whether the wait is worth it depends on the job, on repair prices and on the landlord's own position, so it is a conversation to have with your accountant.
Which date counts
The cash basis is the default for most eligible individual landlords with annual property receipts of £150,000 or less, unless they elect to use accruals accounting. It is not available to property companies. Under the cash basis, the tax year is decided by the date you pay, not the date of the invoice or the date the work was done.
The dividing line is 5 April: a payment made on or before it falls in the old year, and a payment made on or after 6 April falls in the new one. Under accruals accounting, expenses are recognised when incurred under the accounting rules, rather than simply when paid.
Repairs, not improvements
This only helps with costs that can be deducted from rents in the first place. That means repairs that put something back to its previous condition, and replacing furniture, appliances or carpets in a let property, which has its own conditions and does not cover furnishing a property for the first time. Improvements, such as an extension or a loft conversion, are capital costs. They cannot be deducted from rents at all, though qualifying improvement costs may reduce the taxable gain when the property is sold, subject to the usual conditions.
For domestic items, relief normally covers a qualifying replacement rather than the initial purchase. An upgrade is generally limited to the equivalent replacement cost, with adjustments for permitted incidental costs and any disposal proceeds. A modern equivalent is not automatically an improvement.
What not to delay
None of this is a reason to leave a tenant with a problem. Anything urgent, anything that affects health or safety and anything the law requires you to fix should be done when it is needed. Delaying necessary work could put tenants at risk and lead to costs far greater than the possible tax saving.
The point is about work that is truly flexible: a planned redecoration, a bathroom that is tired rather than broken, or a boiler that is old but still working well.
The other change on 6 April 2027
The same date extends Making Tax Digital for Income Tax to eligible landlords whose combined gross property and self employment income exceeded £30,000 in 2025/26, unless an exemption or deferral applies. Those with qualifying income over £50,000 in 2024/25 should already have joined in April 2026.
The test is income before expenses, not profit. A landlord with 3 properties bringing in £2,600 a month between them is over the line, even if mortgage payments and repairs leave very little cash. Where a property is jointly owned, each owner counts only their share of the rent.
Landlords who are in must keep digital records and send HMRC an update every quarter. The first update for 2027/28 is due by 7 August 2027. HMRC has confirmed that landlords joining in April 2027 will not get penalty points for late submission of their first 4 quarterly updates for 2027/28. The updates still have to be sent, and this does not remove the annual tax return obligation or its penalties.
What to do before April
- List the work you are planning over the next 6 months and split it into urgent and flexible.
- For work that is not urgent, think about whether it can sensibly fall into the new tax year, on or after 6 April 2027, once you have weighed the likely tax saving against the cost of waiting. Delaying is not automatically better.
- Check that each job is a repair rather than an improvement before relying on the deduction.
- Add up your 2025/26 rents and any self employed income, before expenses, to see whether Making Tax Digital applies to you from April.
- Set money aside for the higher bill. Any balancing payment for 2027/28 is due on 31
- January 2029, alongside any first payment on account for the following year. Payments on account towards 2027/28 may already be due on 31 January and 31 July 2028.
TaxTune has a free Making Tax Digital checker, which you can access here
