If you’re a landlord, tenant or homeowner, there are some important changes you need to know about from the Autumn 2025 budget.
The updates will bring significant tax changes to the property sector, particularly affecting landlords and the private rental market.
The good news is that these changes don’t take effect immediately. The main measures won’t come into force until April 2027 and April 2028, giving everyone time to plan ahead and adjust their strategies accordingly.
At Roe & Co, we’re keeping a close eye on all these developments to help our clients navigate what lies ahead. Here’s what you need to know.
Key Property Tax Changes
Income Tax Increase on Rental Income for Landlords (from April 2027)
The most significant change for landlords is a 2% increase in income tax rates on rental income. This comes into effect from April 2027.
Currently, landlords who own properties in their own name pay standard income tax rates on their rental profits. From April 2027, these rates will increase by 2 percentage points across all bands:
- Basic rate taxpayers: rental income taxed at 22% (up from 20%)
- Higher rate taxpayers: rental income taxed at 42% (up from 40%)
- Additional rate taxpayers: rental income taxed at 47% (up from 45%)
What does this actually mean in practice? Let’s look at an example:
A basic rate taxpayer earning £12,000 in rental profit currently pays £2,400 in income tax. From April 2027, this will rise to £2,640 – an increase of £240 per year.
For a higher rate taxpayer with the same £12,000 rental profit, their tax bill will increase from £4,800 to £5,040 – again, an extra £240 annually.*
It’s important to note that landlords who own properties through limited companies won’t be affected by this change. They’ll continue to pay corporation tax on their profits as before. This distinction is likely to make the limited company structure even more attractive for property investors going forward.
The Office for Budget Responsibility has warned that these tax increases will reduce returns for private landlords and could lead to a reduction in rental supply over the longer term. When supply decreases whilst demand remains high, rents inevitably rise.
*Please note: Roe & Co is not a tax specialist, and the examples provided are for illustrative purposes only. We strongly recommend seeking independent tax advice from a qualified accountant or tax advisor to understand how these changes will affect your specific circumstances.
The ‘Mansion Tax’ – High Value Council Tax Surcharge (from April 2028)
Properties valued over £2 million will be subject to a new annual surcharge from April 2028, paid on top of existing council tax. This charge will be payable by the property owner rather than the occupier, affecting both homeowners and landlords.
The charges are structured as follows:
| Property Value | Annual Surcharge |
| £2.0-2.5 million | £2,500 |
| £2.5-3.5 million | £3,500 |
| £3.5-5.0 million | £5,000 |
| £5 million+ | £7,500 |
For context, this affects a very small proportion of the market. Data from Rightmove shows that less than 0.5% of all homes sold this year had an asking price over £2 million and around 1% of homes currently for sale are priced above this threshold.
Whilst this won’t directly impact most property owners in our area of Bolton and the North West, it’s worth being aware of, particularly if you own or are considering purchasing high-value investment properties.
What Didn’t Change In The Budget
Despite months of speculation causing uncertainty in the market, some anticipated changes didn’t materialise:
- Stamp Duty rates remain unchanged – There had been widespread rumours of reforms to the current system. These didn’t come to pass – good news.
- National Insurance on rental income was not introduced – This had been a major concern for landlords, so its absence will come as a relief to many.
Impact Of The New Changes On Tenants
Whilst the tax changes directly target landlords, the reality is that tenants are likely to feel the impact too.
The National Residential Landlords Association analysis suggests that the income tax increase could lead to rent rises of £20-25 per month on a typical private rental property across England, with increases potentially exceeding £40 per month in London.
The Office for Budget Responsibility acknowledged in its report that successive tax increases on landlords will reduce the supply of rental properties over the longer term, warning that “this risks a steady long-term rise in rents if demand outstrips supply.”
Making matters more challenging for tenants, particularly those on lower incomes, is the announcement that Local Housing Allowance (housing benefit) rates will remain frozen for a second consecutive year in 2026/27. This affects almost 1.7 million private rented households across the country who receive housing cost support.
The combination of frozen housing benefit alongside expected rent increases will hit low-income renters hardest.
Looking Ahead: Time To Plan
These changes are significant, but there’s an important silver lining: time.
The income tax changes don’t take effect until April 2027, and the high-value property surcharge begins in April 2028. This gives landlords and homeowners breathing space to review their situations and consider their options.
For landlords, this might mean:
- Reviewing your portfolio structure and considering whether a limited company setup makes sense
- Evaluating whether your current rental yields can absorb the additional tax burden
- Planning for potential rent reviews to maintain profitability
- Assessing which properties (if any) you might consider selling
For homeowners with high-value properties, you have time to plan for the additional annual costs from 2028.
In a positive step, the uncertainty in the market has now been removed. The months of speculation about potential changes to Stamp Duty and other major reforms had caused many buyers and sellers to delay decisions. With the Budget now confirmed, the market can move forward with greater clarity.
It’s also worth remembering that these property tax changes sit alongside other significant upcoming legislation, including the Renters’ Rights Act coming into force in May 2026. The cumulative effect of regulatory and tax changes means careful planning is more important than ever.
How Roe & Co Can Help
The property landscape continues to evolve with new legislation and tax changes – there’s never a dull moment. It does mean that staying on top of it all can feel overwhelming.
At Roe & Co, we’re committed to keeping up to date with all these developments so we can provide you with informed advice and support.
For landlords, we offer comprehensive lettings management services that take the stress out of compliance and day-to-day property management. Whether you’re considering your portfolio strategy in light of these tax changes or need support navigating the upcoming Renters’ Rights Act, we’re here to help.
For homeowners, if you’re thinking about selling or just want to understand what your property is worth in the current market, we’re always happy to provide a free, no-obligation valuation and honest advice.
The key message is this: whilst these Budget changes present challenges, with the right planning and support, you can navigate them successfully.
We’re here to help you make sense of it all and plan for whatever comes next – get in touch with us today.
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Important: This blog post is for general information purposes only and should not be considered tax advice. Roe & Co Residential Sales & Lettings is not a tax specialist. We strongly recommend all landlords and property owners consult with a qualified accountant or independent tax advisor to understand how the Budget changes apply to your individual situation.