From new property income taxes, pension caps, and corporation tax changes, read the live updates from today’s Budget announcement.
Today’s Budget announcement was nothing short of chaotic, with an unprecedented leak of the OBR report, the farmer’s inheritance tax protest outside of Westminster, and Rachel Reeves announced further taxes for landlords.
Here, we cover the key takeaways from the Autumn Statement and discuss what the measures mean for landlords and the wider property investment sector.
Property taxes
Some landlords will be paying more tax on their rents, as the tax rates on property income have increased by 2% for both basic and higher-rate taxpayers.
What’s more, from April 2028, owners of properties worth £2m or more will face the new “high value council tax surcharge”. Owners will fall into one of four bands, with properties worth £2m to £2.5m incurring a surcharge of £2,500 per year, rising to £7,500 a year for properties worth £5m or more.
Reeves was clear that this surcharge is to be levied on the owners, not occupiers. For landlords with high-value properties, particularly those in London and the South East, that’s another new charge added onto your tax bill.
In some good news for Limited Company landlords, there was no increase in the headline Corporation Tax rate, which remains at 25% for profits over £250,000.
Commercial property taxes
As part of Labour’s plans to revamp our highstreets and support businesses, Reeves announced “permanently lower tax rates” for more than 750,000 retail, hospitality and leisure properties. This will be funded through higher rates on properties worth £500,000 or more.
Income tax
The Chancellor has extended the freeze on income tax for another three years from 2028. According to the OBR, this decision will result in an estimated 920,000 extra higher rate taxpayers. This stealth tax is expected to raise an additional £8.3bn a year.
Pensions
From April 2029, any salary-sacrificed pension contributions above £2,000 a year will no longer be exempt from National Insurance rates.
Any contributions above this limit will incur charges to both the employer and employee at the standard rates.
Savings and dividends
From April 2026, the basic and higher rates of tax on dividends will increase by 2%. This will hit Limited Company landlords who take a salary through their dividends.
Benefits
From April 2026, the two-child benefit limit will be scrapped. This policy was initially introduced by the Conservative government and meant parents could only claim universal credit for their first two children. Reeves expressed this plan has been “fully costed and fully funded”.
Taxes on motorists
A new pay-per-mile tax is to be introduced from 2028-2029 on electric vehicle drivers. This will charge 3p per mile on EVs and £0.15 for plug-in hybrid cars with the rate per mile increasing annually with CPI. This is estimated to cost the average driver an additional £250 a year.
Fuel duty has once again been frozen at the current rate of 52.95p per litre of petrol or diesel for a further five months. From April 2027, fuel duty will rise annually in line with the RPI measure for inflation. Estimations suggest this will cost motorists £2.4bn in 2026, and £0.9bn in 2027.
Energy bills
To support households, Reeves is planning to cut an estimated average of £76 from annual domestic energy bills. This will be funded by moving the most expensive green levy from household bills to direct taxation.
What this means for property investors
Following the Budget, the OBR has updated its inflation outlook. Inflation is now expected to reach 3.5% this year, slightly higher than the 3.2% forecast in March. Next year’s projection has also increased from 2.1% to 2.5%.
Despite this upward revision, inflation is still expected to return to the 2% target by 2027 and remain there for the following two years.
This suggests interest rates are likely to stay higher for longer, which may continue to affect mortgage costs and refinancing decisions.
Tax Position for Landlords
The Budget confirms that landlords will be paying more tax on rental income which they received personally, but this will also impact those who operate through Limited Companies and rely on dividends.
While corporation tax rates remain unchanged, dividend tax rises will increase the overall tax burden for landlord-directors.
Opportunities for Landlords
Despite the challenges, there may still be some silver linings. Here are some opportunities that may come from today’s announcements:
- Reviewing your ownership structure and consider the most tax-efficient way to hold property (ie Ltd Co, pension scheme etc)
- Business rates are being reduced for many commercial property occupants, which could make commercial investments more attractive and improve tenant affordability.
- Government-backed investment areas may present fresh opportunities for landlords seeking growth locations or higher-yield markets.
Speak to an expert
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Call us on 0345 345 6788 or submit an enquiry here.
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