What Does The Budget Mean for Landlords? Autumn 2025

The Autumn Budget brought a clear policy shift: more tax on income from assets, with landlords squarely in scope. Below is a plain-English run-through of what changed, when it bites, and the practical actions to take now. So, what does the Budget mean for landlords? The headline is that there will be a 2-point income tax surcharge on property from April 2027.

What Does The Budget Mean For Landlords

In a nutshell

From 6th April 2027, property income gets its own set of Income Tax rates, each two percentage points higher than the standard rates. That means a 22% basic rate, 42% higher rate, and 47% additional rate on rental profits earned personally (in England, Wales and Northern Ireland).

The Budget also confirms that finance-cost relief (Section 24) will be given at the property basic rate, so 22% from 2027 rather than 20% today.

Why it matters: if you are a higher or additional-rate taxpayer, you already cannot deduct full mortgage interest; you get a tax credit instead. Raising the rate on property income while keeping that restriction in place magnifies the cash-flow squeeze for mortgaged portfolios.

The “mansion tax” arrives in 2028

From April 2028, England will introduce a High Value Council Tax Surcharge (HVCTS) on homes valued over £2 million, collected alongside council tax. Before then, the Government will consult on reliefs and practicalities of the new charge, but some expert briefings have published illustrative bands and flat annual charges that look like this:

• £2 million to £2.5 million: You pay £2,500

• £2.5 million to £3.5 million: You pay £3,500

• £3.5 million to £5 million: You pay £5,000

• More than £5 million: You pay £7,500

Why it matters: if you own or plan to buy prime stock (including portfolios with single high-value units), you need to build this recurring cost into your rental prices.

No National Insurance on rents (for now)

Despite speculation, National Insurance was not applied to rental income. Instead, the government chose to raise property, dividend and savings rates (the latter two also rise by two points from April 2027).

That’s relevant if you operate through a company and extract profits by dividend, or hold significant cash outside ISAs.

Fiscal drag extended to 2031

The Budget extends the freeze on Income Tax and National Insurance thresholds to April 2031. As nominal rents and other income rise with inflation, more profit is dragged into higher bands, potentially compounding the 2-point property rate rise from 2027.

Should I incorporate?

Holding property in a company is not touched by the new personal property rates; the company pays Corporation Tax (up to 25%) and can still deduct mortgage interest in full. But moving an existing portfolio can cause some headaches. For example, transfers can trigger CGT or Stamp Duty, and you might need mortgage refinancing.

Be wary of marketed “no-tax” routes. HMRC’s Spotlight 69 specifically warns landlords about Limited Liability Partnerships (LLP)-to-company schemes designed to sidestep CGT or Stamp Duty.

Communicating with tenants

Many landlords and associations have already warned that the new Budget rules may require them to increase rents. Here’s some advice on how to broach this with tenants:

• Be upfront about what might happen to their rent

• Explain that mortgage, insurance and compliance costs are rising

• Explain that this requires a rent rise to keep the property well-maintained and safe

• Discuss options to ease the tenants’ burden, like a phased increase, a longer fixed term or small upgrades that cut bills

• Maintain open communication.

Key dates at a glance

• 26 Nov 2025: The Budget was published

• 6 Apr 2027: Property, dividend and savings rates move up by 2 points; finance-cost relief credit becomes 22%

• Apr 2028: HVCTS (“mansion tax”) scheduled to start in England, subject to consultation  

• To Apr 2031: Personal tax thresholds frozen (fiscal drag).

Property management is key

Although rents may have to rise due to external pressures, tenants need to know they are getting value for money. This means you must manage properties efficiently and professionally. Outsourcing property management to us helps you uphold these high standards without stretching yourself too thinly. Discuss your options with us today on 0208 5757630.