Budget Changes 2025: Key tax updates for Landlords, Property Developers and Investors

The Autumn Budget has introduced some of the most significant tax changes landlords and property investors have seen in years. Whether you own a single rental property, manage a portfolio, or operate through a development company, the next few years will reshape how you plan, structure and extract profits.

Below, we break down everything you need to know, clearly and simply, so you can take action early and protect your returns.

1. Property income tax rates are increasing by 2% (from April 2027) 

From April 2027, rental income will sit under a new, separate property-only tax system:

  • Basic Rate: 22%

  • Higher Rate: 42%

  • Additional Rate: 47%

What this means for landlords

These increases will be felt most by:

  • Landlords with mortgages, already squeezed by Section 24.

  • Higher-rate taxpayers.

  • Those with mixed income streams (salary, dividends, rental income).

  • Property owners relying on rental income as a primary income source.

With allowances applied to other income types first, more of your rental profits will fall into these new, higher property tax rates.

2. New high value property surcharge (from 2028) 

A new annual surcharge will apply to properties worth:

  • £2m+: £2,500 per year

  • £5m+: £7,500 per year

This won’t impact the majority of landlords, but it reflects the Government’s clear direction: higher-value property will come with higher annual taxation over time.

Portfolio landlords, prime-location investors and developers holding stock should pay particular attention to this.

3. Tax thresholds frozen 

Whilst rental income will not attract National Insurance in the near term, the income tax and National Insurance contribution thresholds will remain frozen until April 2031, which, combined with inflation and wage growth, is expected to pull more landlords into higher tax brackets (fiscal drag).

4. Corporation tax late-filing penalties doubled

From 1 April 2026, penalties for submitting Corporation Tax returns late will double.

Current penalties for late CT submission are as follows:

  • Return late – £100 becoming £200
  • Return more than 3 months late – £200 becoming £400
  • Three successive failures, return late – £500 becoming £1,000
  • Three successive failures, return more than 3 months late – £1,000 becoming £2,000

5. Making Tax Digital for Landlords begins april 2026

MTD for Income Tax is still going ahead. If your gross rental income exceeds £50,000, you’ll be in the first phase.

Landlords must:

  • Keep digital records

  • Use MTD-compliant software

  • Submit quarterly digital updates to HMRC

Higher-risk groups

Landlords with:

  • Multiple properties

  • Joint ownership structures

  • Holiday lets

  • Agency-managed portfolios

  • Paper or spreadsheet-only bookkeeping

MTD will bring additional admin, but preparing now will avoid future penalties.

We will be sharing detailed advice on how to reduce the impact of Making Tax Digital to help you over the coming weeks.

What these changes mean for your property strategy 

Higher tax bills from 2027 onwards

Most landlords will pay more tax under the new property rates, especially those with debt or mixed personal income.

Tighter yields and reduced profitability

With frozen allowances, rising costs and increased compliance, older portfolio models may no longer be sustainable without restructuring.

Greater interest in incorporation

Many landlords will revisit company structures as a way to reduce long-term tax, though incorporation is not suitable for everyone.

You must consider:

  • Capital Gains Tax

  • Stamp Duty on transfers

  • Mortgage renegotiation

  • Future profit extraction costs

More compliance pressures

Between MTD and the new Renters’ Rights Act, landlords will need stronger systems and documentation to remain compliant and avoid fines.

Renters’ Rights Act 2025: What’s changing?

The Renters’ Rights Bill has passed its final Commons stage and is expected to become law soon.

While dates are not yet confirmed, phased implementation is likely from late 2025 onwards.

Key reforms include:

  • Abolition of Section 21

  • Stronger rights for tenants to challenge rent increases

  • Higher property condition standards

  • Stricter enforcement and penalties

Combined with rising taxes, this Act will reshape the private rental sector, placing a far greater emphasis on compliance and documentation.

What Landlords and Developers should do now

  1. Run a 3–5 year tax forecast – Identify where tax increases or rising costs will erode profit.
  2. Review borrowing and financing – Mortgaged landlords will be most affected by rising costs and new tax rates.
  3. Stress-test each property – Factor in voids, arrears, maintenance and reduced net yields.
  4. Prepare for MTD early – Waiting until 2026 will cause unnecessary stress.
  5. Strengthen compliance processes – The Renters’ Rights Act will penalise poor documentation or property condition.

How A4G supports Landlords and Property Investors

At A4G, we help landlords, developers and investors understand the impact of these changes and make confident decisions.

We offer:

  • Detailed property tax planning

  • Portfolio reviews and yield forecasting

  • MTD readiness assessments

  • Incorporation advice and modelling

  • Long-term wealth, exit and succession planning

If you want clarity around what these Budget changes mean for your property plans, we’re here to help.

Ready to review your property strategy? 

If you’d like a personalised assessment of how the new rules affect you, simply get in touch below.

Book a call with Mitch today and protect your future returns.

Book your free discovery call

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