Nikka Sulton

With the autumn Budget approaching, landlords are paying close attention to possible changes that could affect their property investments and rental income. The Government faces pressure to raise revenue while funding public services, putting property taxation firmly in the spotlight.

Residential property represents a significant share of wealth in the UK, making it a potential target for further tax changes. Although several proposals remain speculative, landlords should understand the measures already announced and the areas where future changes could affect their finances.

1. Capital Gains Tax Could Rise

Capital Gains Tax (CGT) remains a subject of speculation ahead of the Budget, with suggestions that rates could be brought closer to income tax rates. However, no further increase has been confirmed in the information available.

For landlords planning to sell investment properties, a higher CGT bill could reduce the profit retained from a sale. Those who intend to hold their properties for the long term may be less immediately affected, but investors considering selling could need to reassess their plans.

Any increase could also influence when landlords choose to dispose of assets, making the timing of sales and tax planning more important.

2. What Landlords Need to Know About the Mansion Tax

The Government previously announced the High Value Council Tax Surcharge, commonly referred to as the mansion tax. The measure is scheduled to take effect in April 2028 and will apply to residential properties valued at £2 million or more.

The surcharge is expected to affect fewer than 1% of homes in England, representing approximately 165,000 properties. However, questions remain about how property values will be assessed, particularly for homes that have not been sold for many years.

Concerns have also been raised about whether enough qualified valuers will be available to complete the necessary assessments before the scheme begins.

The Government has stated that the property owner, rather than the tenant, will be responsible for the surcharge. However, further clarification may be needed regarding how the system will operate for high-value rental properties, where tenants commonly pay council tax.

The autumn Budget could provide further details about the scheme, including its implementation and any changes to its scope or timetable.

3. Could Broader Property or Wealth Taxes Be Introduced?

There has been ongoing discussion about wider reforms to property taxation, including the possibility of an annual property tax that could replace existing charges such as stamp duty and council tax.

One proposal previously supported by the Prime Minister involved introducing a proportional property tax based on a home’s value. Under such a system, owners of more expensive properties could face larger bills, potentially including those with second homes and rental investments.

For landlords, the impact would depend on the final design of any policy and whether investment properties were included. However, no specific new annual property tax has been confirmed in the information available.

Although pressure for reform continues, a major overhaul would require considerable planning and preparation. Landlords should therefore distinguish between proposals being discussed and changes that have actually been announced.

4. Rental Income Tax Increases From April 2027

One of the most significant confirmed changes for individual landlords is the planned increase in income tax rates on rental profits and savings interest from the 2027/28 tax year.

Under the announced changes, each rate is due to rise by two percentage points:

Basic rate: increasing from 20% to 22%.
Higher rate: increasing from 40% to 42%.
Additional rate: increasing from 45% to 47%.

These increases could reduce the amount of rental profit landlords retain after tax, particularly when combined with mortgage costs, maintenance expenses and other property-related outgoings.

Landlords operating through limited companies should also consider changes affecting dividend income. The ordinary and upper dividend tax rates increased by two percentage points from 6 April 2026.

The current dividend tax rates are:

Basic rate taxpayers: 10.75%.
Higher rate taxpayers: 35.75%.
Additional rate taxpayers: 39.35%, unchanged from 2025/26.

Whether the Chancellor will introduce further increases to taxes on investment income in the autumn Budget remains uncertain.

5. Reviewing Property Portfolios Ahead of the Budget

With confirmed tax increases already approaching and further changes being discussed, landlords may benefit from reviewing their portfolios before making investment decisions.

Calculating expected rental income after tax, mortgage interest and operating expenses can help investors understand whether their properties will remain financially viable under the new rules.

Landlords should also consider how potential changes to CGT, property taxation and the treatment of high-value homes could affect their longer-term plans. Any decisions should be based on confirmed policies rather than speculation alone.

The autumn Budget could provide greater clarity on the Government’s approach to property taxation. In the meantime, understanding the announced changes and reviewing expected returns can help landlords prepare for potentially higher costs and continued uncertainty.

Source: Rob Morgan, chief investment analyst at Charles Stanley Direct, part of Raymond James.