Autumn Budget 2025: key takeaways for your landlord clients

Increase in income tax rates on property income

 From April 2027, the basic, higher, and additional rates of income tax on property income will each rise by 2 percentage points, moving to: 

• Basic rate: 22%
• Higher rate: 42%
• Additional rate: 47%

The OBR suggests this will mean landlords may face tighter margins, and the market could see upward pressure on rents over time.

Currently, finance cost relief is available to landlords. It ensures they continue to receive income tax relief on mortgage interest costs. From April 2027, it is proposed that this relief will rise by 2 percentage points and applied at the new property basic rate of 22%, meaning landlords will benefit from a higher credit on their finance costs, helping to offset rising expenses.

• Finance cost relief is due to rise from 20% to 22%

From April 2026 the ordinary and upper rates of tax on dividend income will increase by 2 percentage points for limited company landlords. There will be no change to the dividend additional rate. This will apply to your landlord clients who receive income via dividends paid out by a company. 

• The ordinary rate will rise from 8.75% to 10.75%
• The upper rate from 33.75% to 35.75%
• The additional rate will remain unchanged at 39.35%

High value council tax surcharge

From April 2028, a new annual surcharge will apply to residential properties valued over £2 million. Key details:

• £2,500 for properties between £2 million and £2.5 million.
• Rising to £7,500 for properties valued at £5 million or more.
• The surcharge will be uprated annually with Consumer Price Index inflation.
• It will be in addition to existing council tax and collected by central government, not local authorities.

The OBR expects this measure to raise £0.4 billion in 2029–30, its first full year of operation. It also anticipates some “price bunching” just below the thresholds and modest downward pressure on property prices in affected bands.