Budget 2025: property investors and landlords in Chancellor’s sights
Residential landlords have been firmly in the sights of Chancellors for many previous Budgets, and this year was no exception.
The headline change is a 2% increase in income tax on rental income. This increase is applied across the board, meaning an effective rate of 22% for basic rate taxpayers, 42% for higher rate taxpayers and an eyewatering 47% for those paying the additional rate.
The Chancellor Rachel Reeves said the measures were about ‘fairness’ and ‘narrowing the gap between the tax on income from assets and income from work’.
These changes are expected to raise an additional £500 million a year from landlords.
Additionally, the Government has given Mayors across England the ability to charge holidaymakers a ‘visitor levy’, or tourist tax. This had been rumoured to be £2 per person per night, to be collected by landlords. A consultation is to be announced that will seek contributions from all parties on how the tax will work and its levels.
Landlords of high-value properties, worth over £2 million, will see additional charges to Council Tax (High Value Council Tax Surcharge) from April 2028. Properties with a value of £2 million or more will face a £2,500 surcharge, rising to £7,500 on properties valued over £5 million.
The surcharge is imposed on owners, not occupiers. Although the surcharge sits alongside the existing Council Tax structure, there will be no general revaluation of Council Tax band thresholds. Instead the Valuation Office Agency will carry out a targeted valuation exercise in 2026 to identify properties above £2 million. Although given the Council Tax label, the charge is a national annual levy on high-value property ownership.
Landlords have had to contend with the removal of the wear and tear allowance, energy savings allowance, the removal of mortgage interest relief, and changes to Capital Gains Tax. Recent legislation, including the Renters Rights Act which abolished no-fault evictions, has left many private landlords questioning their involvement in the sector.
We would encourage landlords and purchasers of property at or above £2 million to review their tax position and ownership structures (companies, funds, trusts, and nominee arrangements) following this Budget before acquiring or disposing of property, and respond to the Government’s consultation when it is published early next year.
Contact our Private Client Solicitors
If you are in need of advice or assistance on any of the legal issues mentioned in this article, please contact any member of our experienced Private Client team on 020 7631 4141 or email privateclient@bishopandsewell.co.uk
The above is accurate as at 28 November 2025. The information above may be subject to change.
The content of this note should not be considered legal advice, and each matter should be considered on a case-by-case basis.
