Higher tax on rental & property income (from 2027)

• Rental income will be taxed at higher rates.
• Basic-rate landlords now pay 22% instead of 20%, higher-rate pay 42% instead of 40%.
• This reduces net profits for anyone holding property in their personal name.

High-value property surcharge (“mansion tax”) from 2028

• Properties worth £2M+ will face an annual surcharge, similar to extra council tax.
• Investors holding premium or high-value homes will see increased ongoing costs.
  

Dividends & investment income taxed more

• Higher dividend and savings tax will affect investors who:
  
  • Own property through a limited company
  • Take income via dividends
    
• This makes extracting money from company-owned portfolios more expensive.
  

What This Means for Property Investors & Landlords

1. Lower Net Returns

• Higher taxes on rental income mean reduced cashflow.
• HMOs, BRRs and higher-yield strategies become more attractive compared with standard BTL.
  

2. High-value assets less attractive

• The surcharge on £2M+ homes increases holding costs, pushing investors toward:
  
  • Northern cities
  • Smaller units
  • Higher-yield stock
    

3. Possible increase in landlord exits

• Some landlords with low-yield or highly leveraged properties may sell up due to reduced profitability.
  

4. Bigger focus on tax-efficient structuring

• Many landlords will re-evaluate:
  
  • Company structures
  • Refinancing
  • Portfolio reshaping
  • Moving away from personal-name ownership
    

5. More demand for yield-driven deals

• Investors will now push toward:
  
  • HMOs
  • Flats under £150–200k
  • BRR opportunities
  • High-cashflow regional markets
    

The Big Picture

The Government is intentionally shifting the tax burden onto property income and high-value property ownership.

For landlords and investors, this means:

• Be more selective with what you buy
• Re-analyse your portfolio
• Focus on yield, not speculation
• Consider corporate structures for tax efficiency