Why the allowance is already used up
The State Pension is taxable but paid without tax taken off. With a full new State Pension of £12,547.60, only £22.40 of your Personal Allowance is left in 2026/27. Any private pension and rental profit sits on top.
| Full new State Pension, plus £10,000 rental profit | 2026/27 | 2027/28 |
|---|---|---|
| State Pension | £12,547.60 | £13,036.40 |
| Taxable rental profit | £9,977.60 | £10,000 |
| Rate on rental profit | 20% | 24% |
| Tax on rental profit | about £1,996 | about £2,400 |
The 2027/28 figure assumes all State Pension above the allowance is taxed first at 20%; the rental profit then pays the property rate.
The new Pension Tax Allowance won't usually help landlords
The Budget of 28 October 2026 confirmed a temporary Pension Tax Allowance from April 2027, so pensioners whose total income is no more than the full State Pension pay no income tax. It tapers away just above that level, so landlords with any meaningful rental profit are unlikely to benefit. Check GOV.UK for the final rules.
How the tax is paid
- Register for Self Assessment if your rental profit is over £2,500 or rent over £10,000. See telling HMRC.
- If you have a private or workplace pension, HMRC may collect tax by adjusting its tax code.
- Payments on account may apply. See payments on account.
Planning points for older landlords
Consider how the property passes on death (see inheriting a rental), whether selling and the 18%/24% CGT rates suit you, and Making Tax Digital if your gross rent is over £30,000 from April 2027.
Frequently asked questions
Do pensioners pay tax on rental income?
Yes, if total income is above the £12,570 Personal Allowance. The full new State Pension uses nearly all of it, so most rental profit is taxable.
Sources
- GOV.UK: The new State Pension, what you'll get
- GOV.UK: Income Tax rates and allowances, current and past
- HM Treasury: Budget documents, 28 October 2026
- GOV.UK: Renting out your property, paying tax
Sources last checked 10 November 2026. See all our sources and how we keep pages up to date.