The Chancellor’s Autumn 2025 Budget has introduced significant changes that will reshape the landscape for property investors over the coming years. With higher taxes on property income and new levies on high-value homes, investors need to act now to protect profitability and ensure their structures remain fit for purpose.
If you’re a property investor, this is the time to revisit your numbers, explore alternative ownership structures, and re-evaluate your long-term strategy. Professional advice can help you weigh up the options and avoid costly missteps.
What was announced?
From 6 April 2027, income from property will be taxed at new rates:
| Tax Band | Tax Rate |
| Basic Rate | 22% |
| Higher Rate | 42% |
| Additional Rate | 47% |
In addition, from April 2028, owners of high-value properties (valued over £2 million) will face a High Value Council Tax Surcharge, often referred to as a ‘mansion tax’:
| Property Value | Annual Charge |
| £2m to £2.5m | £2,500 |
| £2.5m to £3.5m | £3,500 |
| £3.5m to £5m | £5,000 |
| Over £5m | £7,500 |
These measures will significantly increase the tax burden for many landlords and property investors, making it essential to review your position.
Adviser’s perspective
With rising income tax rates and new levies on higher-value homes, the question is no longer simply “how much tax will I pay?”, it is “is my property portfolio structured efficiently?”
Property investors should be asking themselves:
- Am I running a profitable business, and is it tax-efficient?
- Would a company or transferring ownership within the family improve my position?
- Is now the right time to restructure?
Is your property business profitable?
After mortgage costs, maintenance, compliance obligations, and now higher tax rates, many property investors will see margins eroded. Add to this the impact of regulatory changes, and the picture becomes even more challenging.
Stress-testing your portfolio under the new rules before they apply is essential. This exercise will help you understand whether your current structure remains viable or whether changes are needed to maintain profitability.
What alternatives are there?
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Holding property through a company
Incorporating your property business can shield you from higher personal income tax rates and restrictions on mortgage interest relief. However, incorporation brings its own costs and complexities, including:
- Stamp Duty Land Tax (SDLT) on property transfers
- Capital Gains Tax on disposals
- Ongoing compliance and reporting obligations
A word to the wise – don’t forget ATED (Annual Tax on Enveloped Dwellings)
If you hold UK residential property worth over £500,000 through a company, ATED applies. This is an annual charge based on property value, separate from income tax or corporation tax. For 2025/26, charges range from £4,450 for properties worth £500,001–£1m up to £292,350 for properties over £20m.
Reliefs are available if the property is:
- Let commercially to third parties
- Held for property development or resale
- Used as employee accommodation
Even if relief applies, an ATED return must still be filed annually. This is a key consideration when deciding whether incorporation is worthwhile.
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Transferring property within the family
In some cases, transferring property to a spouse or family member can be more tax-efficient, particularly if they have unused personal allowance or fall within a lower tax band.
This approach can also support succession planning, especially where there is a strong emotional or long-standing connection to the property. A softer housing market may make transfers less costly now due to lower valuations, but inheritance tax implications must be considered to ensure the overall strategy works for your family.
Three things to do now
- Run the numbers – Model your portfolio under the new tax rates and stress-test cash flows.
- Explore structures and aims – Compare individual vs. corporate ownership and assess whether family transfers make sense.
- Implement your strategy – Once you’ve considered your position carefully, with expert input, adopt the structure that best meets your needs.
Final thoughts
The Autumn Budget changes are a wake-up call for property investors. Higher taxes and new levies mean that yesterday’s strategies may no longer deliver tomorrow’s returns. By reviewing your portfolio now and seeking professional advice, you can make informed decisions that protect your wealth and position your property business for the future.
