The Autumn Budget 2025 brings important changes for landlords - some expected, some surprising and all with long-term implications for profitability, compliance and strategy.

Although the most dramatic rumours didn’t materialise, the Chancellor has introduced new tax measures for property investors.

Here are the key updates you need to know.

1. Property income tax rates are rising

From April 2027, all property income tax bands will increase by 2 percentage points:

• Basic rate: 22% (up from 20%)
• Higher rate: 42% (up from 40%)
• Additional rate: 47% (up from 45%)

If you hold property in your own name, especially with a leveraged portfolio, you’ll feel the squeeze most. Landlords operating through limited companies won’t be affected by these rises - something that may prompt discussions around restricting investments.

2. Reliefs and allowances: subtle changes

A few important points to keep in mind:

• Personal allowances continue to apply to non-property income first, with any surplus used against rental income.
• Mortgage interest relief remains, but from 2027 it will be calculated at the new 22% basic rate.
• The £1,000 property allowance and Rent a Room Scheme are unchanged.

With frozen income tax thresholds, individual landlords with high borrowings, will start to see an impact on liabilities if profits fall within the higher rate band and do not benefit from full mortgage interest relief.

3. Income tax thresholds frozen until 2031

This is one of the more quietly significant announcements. Tax thresholds will remain frozen for another six years, until 2031.

As wages and rents rise with inflation, more landlords will be pulled into higher tax bands. Over time, this “fiscal drag” could cost more than the rate increases themselves.

4. Making Tax Digital (MTD) expands further

A major compliance shift is on the way. If you’re not already using digital bookkeeping, now’s the time to act.

Current timeline:

• From April 2026: Landlords with property income over £50,000 must keep digital records, submit quarterly updates and file returns online.
• From April 2027: The threshold drops to £30,000, bringing many more landlords into scope.

New measures announced:

• HMRC will introduce a penalty points system from April 2026, however a ‘soft landing’ means penalties will be delayed, giving you time to adapt.
• “Reasonable excuses”, like tech issues, will be considered more leniently during rollout.

Choosing HMRC-approved software now will help you stay compliant and reduce future disruption.

5. Capital Gains Tax (CGT): no changes - for now

There were no changes to CGT in this Budget, so:

• Residential property gains are still taxed at 18% / 28%.
• The 60-day reporting and payment window remains.

This gives landlords considering a sale more certainty when planning disposals.

6. New high-value property ‘mansion tax’ from 2028

Whilst not solely a consideration for landlords, from April 2028, a new High-Value Council Tax Surcharge will apply to homes worth over £2 million.

• Annual charges will range from £2,500 to £7,500, depending on property value.
• Fewer than 1% of homes are affected, but landlords with premium properties in London or the South East should factor this into future planning.

Market outlook: what landlords should expect

The Office for Budget Responsibility (OBR) expects these changes to reduce net returns for many landlords. Combined with other pressures - such as the Renters’ Rights Act - we could see:

• Rents rising as supply shrinks.
• Portfolio consolidation, with less profitable properties sold.
• A shift in compliance procedures, including more landlords using restructuring investments and utilising digital systems.
• A stronger focus on cash flow modelling and tax efficiency.

The next two years will be crucial for making the right decisions.

Planning ahead: where to focus

With major changes arriving from April 2027, it’s a good time to review your structure and tax position. Areas to consider:

• Timing income and expenses: Bringing income forward or delaying big repairs may help reduce liabilities after tax rises.
• Ownership structure: Incorporation or joint ownership could offer benefits, depending on your goals.
• Digital compliance: These deadlines aren’t moving. Are your systems ready well before making tax digital comes into effect.

Need help?

With rising taxes, frozen thresholds and stricter compliance rules, landlords face more complexity than ever. Taking action now could make a real difference later.

Our personal tax and landlord specialists are here to help you plan ahead.

Get in touch with your usual Larking Gowen contact or email enquiry@larking-gowen.co.uk.

Emily Willis