The Association of Taxation Technicians (ATT) published a briefing on the Finance Bill 2025-26 outlining changes to tax rates for property income.
Clauses 6, 7 and 8 introduce new basic, higher and additional income tax rates for property income from 2027/28, set at 22%, 42% and 47%.
The bill also extends powers for the Scottish Parliament and Welsh Senedd to set their own rates for property income.
ATT stated that finance costs for loans on residential lets, including mortgage interest, are not deductible from rental profits and are instead treated as a tax reducer at the UK basic rate.
This approach has led to mismatches where devolved rates and bands do not align with the rest of the UK.
ATT added that the new rules in the Finance Bill could make these anomalies worse.
The ATT briefing recommends considering alternative relief calculations for Scottish and Welsh taxpayers from 2026/27, or at the latest from 2027/28, to address these issues.
