Key Announcements
- No National Insurance on rental income
- Property income tax increase: From April 2027, property income tax rates will rise by 2 percent-point increase. 22% for basic taxpayer, 42% for higher-rate and 47% for additional-rate. Higher rates will apply to rental profit, calculated using existing rules (e.g. allowable expenses deducted before tax is calculated).
| Annual Rental Profit | Estimated Additional Tax |
| £10,000 | £200 |
| £25,000 | £500 |
| £50,000 | £1,000 |
It is anticipated that such increases will be passed on in higher rents.
- Mansion tax: From April 2028, homes valued over £2 million will face an additional annual charge.
- Dividend and saving income tax: These will also rise in line with the 2 percent point increase. Will have impact on landlords who run properties via limited companies and draw profits as dividends.
- Income tax thresholds frozen, increasing fiscal drag: Budget extends freeze on personal income-tax thresholds until 2031, continuing the fiscal drag putting more landlords into higher rates.
What does this mean for Landlords?
The combined impact of the key announcements means many landlords may see reduced yields. However, the rental demand remains strong, and the properties still outpace the supply, which can support rental yields as market rents increase.
It allows ample time for strategic planning and don’t forget to consider long-term holding costs (such as the rental reforms, compliance and maintenance).
The government have shown a clear direction of travel for the rental market: tighter finances, stricter compliance and stronger operational conditions across the sector. However, despite this we recognise that property remains a strong long-term asset and for many landlords it will be where the real value lies.
We’re here to help you understand and support you through the upcoming changes! One of our friendly team are only a phone call or email away.
