Increased Tax
For landlords operating as sole traders or partnerships, rates of income tax from property income will increase by two percentage points from April 2027. The basic, higher and additional rates will increase to 22%, 42% and 47% respectively.
Limited company landlords are unaffected at the rental-profit level, though dividend withdrawals from a company will also be taxed 2% higher.
High Value Council Tax Surcharge
Other measures that will affect landlords include an annual High Value Council Tax Surcharge, which will be introduced for properties valued at over £2 million, to be introduced in April 2028. This will be levied on property owners, rather than council taxpayers, further increasing landlord costs.
The Office for Budget Responsibility (OBR) has recognised that the changes will hit landlords in the pocket and force rents up.
Measures Affecting Landlords and Tenants
- Energy Bill Reductions – of £150 per typical household bill
- Removal of the 2 Child Benefit Cap – boosting income for lower-income families
For the full budget contents; Budget 2025 in full – GOV.UK