Budget 2025: What landlords need to know

In the lead-up to the budget, many anticipated sweeping reforms to the property market rather than minor tweaks. In reality, while the announcements will have an impact, they remain relatively limited in scope. Here’s what landlords need to be aware of as we move into 2026:

Tax on UK land and property

The Chancellor has announced a 2% increase on land and property income, effective from April 2027. One key uncertainty remains: will the 20% finance tax credit be increased along with tax rates? Particularly for landlords with larger portfolios, this could be a crucial factor in future planning.

Dividend tax

For those operating through limited company SPVs, dividend tax will rise by 2% from April 2026. This change will directly affect landlords withdrawing profits from their property companies, so factoring this into your cashflow strategy is essential.

‘Mansion’ tax

A new council tax surcharge applies to properties valued above £2 million, structured in four bands:

£2,500 per year for properties worth £2m–£2.5m
£3,500 per year for properties worth £2.5m–£3.5m
£5,000 per year for properties worth £3.5m–£5m
£7,500 per year for properties valued at £5m and above

Importantly, this surcharge is payable by the legal owner, not the occupier – meaning landlords will bear the cost, not tenants. While exemptions and deferrals for cash-poor owners are being considered, details are yet to be confirmed.

Income tax threshold freeze

Although not a property-specific measure, the freeze on income tax thresholds until April 2028 means many landlords could be pushed into higher tax bands as rental income rises. This makes proactive tax planning even more critical.

What this means for landlords

With multiple tax changes on the horizon, landlords should: