Following the Autumn Budget, landlords must budget and prepare for increased costs thanks to Rachel Reeves’ tax increases across the board. It means that portfolio health checks should be top of your to-do list for 2026 to ensure that you’re operating as efficiently as you can be and are maximising margins.
Account for property income tax rises
For many landlords, the most significant announcement in the budget was the property income tax increase. Additional raids on property income had been anticipated pre-budget, although the expectation was of a National Insurance charge on rental income.
Instead, Chancellor Rachel Reeves chose to raise taxes, although she said the reasoning was the same – that landlords who earn from such sources don’t face the equivalent of National Insurance that employees must pay.
From 6 April 2027, separate tax rates for property income will be introduced. These include a 22% basic rate, 42% higher rate and 47% additional rate. Dividend income tax rates are also increasing by 2 percentage points, although this will take effect a year earlier from 6 April 2026 and will apply at the ordinary and upper rate.
Budget longer-term for fiscal drag of frozen tax thresholds
Another tax raid from Reeves came with the announcement of a three-year extension to the freezing of income tax thresholds. These had been due to thaw in 2028 but the freeze on thresholds has now been extended to 2030-31, which means more landlords – and tenants – will get pushed into higher tax brackets and end up paying more tax as a result of fiscal drag.
Plan for additional surcharge if you rent out £2 million+ properties
There are even more costs to absorb if you are operating at the very top end of the rental market. The introduction of a mansion tax, or high value council tax surcharge, will see an additional levy of £2,500 on top of the council tax already due on a £2 million-plus property. This charge increases to £7,500 for properties worth £5 million or more and will apply from 1 April 2028.
Review for efficiency and risk reduction
A portfolio health check will help you to understand how well you can manage these cost increases, changes you may need to make and how to plan. This is especially important with the advent of the Renters’ Rights Act, the first phase of which will launch on May 1, 2026.
The market may have its challenges – and for some these could be enough to persuade some landlords to exit the market – but rental demand and rental growth will remain strong for those who can absorb the tax rises. A portfolio mix, especially one that is well-balanced across property types, should help to reduce risk.
If you need help or advice on managing your property portfolio, then please do get in touch.
