The Autumn Statement has landed, and while many feared a harsh set of measures for property investors, the reality is mixed. There are changes that will affect landlords, but also some opportunities for the future. Here’s what you need to know.
Rental Income Tax Increase
One of the headline changes is a 2% increase in tax on rental income for personally owned properties. This applies to both basic and higher-rate taxpayers. The good news? If you hold properties in a Limited Company, this increase won’t affect you.
This change also applies to other forms of investment income, such as dividends and savings interest, so it’s not landlord specific. Still, it’s a reminder to review your ownership structure and consider whether a company setup could reduce your tax burden.
Read our blog on: Personal vs Limited Company Borrowing for Buy to Let >>
Mansion Tax for High-Value Properties
From April 2028, properties worth over £2 million will face an additional levy on top of council tax:
- £2m–£2.5m: £2,500 per year
- £2.5m–£3.5m: £3,500 per year
- £3.5m–£5m: £5,000 per year
- Over £5m: £7,500 per year
This will mainly impact landlords with luxury assets or large HMOs in prime locations. Importantly, the owner pays this charge, not the tenant.
Corporation Tax: No Change
For those operating through Limited Companies, there’s some relief. The headline corporation tax rate remains at 25% for profits over £250,000. No increase here means stability for portfolio landlords using company structures.
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Business Rates Reform
Labour plans to reduce business rates for retail, hospitality, and leisure properties, funded by higher charges on properties worth over £500,000. If you own commercial or semi-commercial property, this could improve tenant affordability and make these investments more attractive.
Search thousands of buy to let mortgage rates here >>
Income Tax Threshold Freeze
While income tax rates remain unchanged, thresholds are frozen until 2028. This ‘stealth tax’ means that as incomes rise, more landlords could be pushed into higher tax bands.
Mortgage Market Outlook
The OBR forecasts inflation at 3.5% this year, higher than expected. This could keep the Bank of England Base Rate elevated for longer, delaying reductions in mortgage rates. Fixed-rate pricing depends on SWAP rates, which track Base Rate expectations, so landlords should prepare for continued pressure on borrowing costs.
Planning Ahead: What Should Landlords Do?
The Autumn Statement isn’t just about reacting to changes; it’s about preparing for the future. With tax increases and market pressures on the horizon, landlords should take proactive steps to protect profitability and identify new opportunities.
Here are some practical considerations:
- Speak to a tax advisor who can help you to review your ownership structures: Limited companies, LLPs, or pension schemes could help mitigate tax increases.
- Explore commercial property: Lower business rates may boost tenant affordability and returns.
- Consider regeneration areas: Government-backed investment zones could offer strong growth potential in property values and rental demand.
Next Steps
While the Autumn Statement brings challenges, it also highlights opportunities for strategic planning.
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