Budget 2026: what it means for property investors and landlords

The 28 October Budget adds two more points to the tax on rental income from April 2027, confirms the surcharge on £2m-plus homes from 2028 and leaves stamp duty and capital gains tax rates alone; read it alongside our property tax guide for investors.

What the Chancellor announced for property on 28 October 2026

The Chancellor announced a further two-point rise in the tax rates on rental income from April 2027, taking them to 24%, 44% and 49%, with no change to dividend tax.

HMRC's tax information and impact note of 29 October 2026 sets the new rates out as a list: "From April 2027, the tax rates for property income will increase to: 24% for the property basic rate, 44% for the property higher rate, 49% for the property additional rate and property trust rate". If you let in your own name, rent taxed today at 20%, 40% or 45% moves to these rates; salary and pension stay on the main rates, while rent and savings interest move.

HM Treasury's Budget 2026 Red Book, 28 October 2026: "Budget 2025 increased the rates of tax on savings and property income by two percentage points across all tax bands from April 2027. The government will increase these rates by a further two percentage points from that date." Both rises land on the same day, so the step up from today's rates is four points.

The impact note on timing: "The changes to the property basic, higher and additional rates… will take effect for the 2027 to 2028 tax year and subsequent tax years." Nothing changes for 2026-27; the new rates start on 6 April 2027, and they are to be legislated in Finance Bill 2026-27, which is at first reading with its text not yet published.

The same note on who pays: "This measure will affect individuals and partnerships who receive income from letting property… and trustees of trusts and personal representatives of deceased persons who receive property income or savings income." Companies are not on that list.

And on scale: "It is estimated that by 2031 to 2032, 2.4 million landlords (5% of taxpayers in 2031 to 2032) will face changes in tax as a result of this measure." That is a 2031-32 estimate; HMRC's figures for 2027-28 are around 5% of taxpayers and £225 a year.

John Healey, Chancellor of the Exchequer, Budget 2026 speech, 28 October 2026: "No tax rises on wages or dividends." Dividend rates stay at 10.75%, 35.75% and 39.35%, so drawing profit out of a company costs the same as now.

For individuals the property rates apply in England, Wales and Northern Ireland; the Scottish and Welsh governments have been given the power to set their own. Quartico does not give tax advice, and how these rates fall on you depends on your other income: speak to a qualified tax adviser.

The surcharge on £2m-plus homes is going ahead

The High Value Council Tax Surcharge on homes worth £2 million or more in England starts on 1 April 2028, at £2,500 to £7,500 a year.

The government response, HM Treasury and MHCLG, 28 October 2026: "Having considered the consultation responses, the government intends to proceed with the High Value Council Tax Surcharge." The consultation changed details, not the decision.

HMRC's policy paper, 28 October 2026: "The High Value Council Tax Surcharge (HVCTS) is a new annual charge on owners of residential property in England worth £2 million or above." The bands are £2,500 (£2m to £2.5m), £3,500 (£2.5m to £3.5m), £5,000 (£3.5m to £5m) and £7,500 (over £5m), collected by councils alongside council tax.

The response, paragraph 6.1: "From March 2028, local authorities will be able to issue bills to liable owners." Bills can arrive in March 2028 for a charge that applies from 1 April 2028.

Paragraph 3.1: "owners, rather than occupiers, will be liable to pay." A landlord letting a £2m-plus home pays it, not the tenant, and where a company legally owns the property the company is liable.

Paragraph 6.12: the government is "legislating to levy a 100% premium on homes which are substantially unfurnished and unoccupied for a period of 12 months or more." A £2m-plus home left substantially unfurnished and unoccupied for a year or more pays double.

Paragraph 4.7: "the government intends to implement the deferral criteria set out in consultation, that is, a household income of £35,000 or less, or capital savings of £16,000 or less". Few investors will meet that, and a deferral ends when the property changes hands.

Discounts cover registered social housing providers, charities that meet a charitable purpose test, and a developer's unsold new-build until first sale or twelve months after the completion notice. Not providing ownership information can cost 10% of the annual charge after 21 days, rising to 30% after a further 21 days. The charge will be legislated in Finance Bill 2026-27, with regulations and guidance to follow.

For Quartico readers this touches an investor holding a £2m-plus home in England, including through a company. A typical buy-to-let is far below the threshold.

The smaller measures that touch landlords

The smaller measures that reach landlords are SDLT on assured-tenancy rent, CGT return penalties, ATED, Business Asset Disposal Relief, Making Tax Digital penalties, payments on account, corporation tax rates and a coming consultation on rental income reporting.

SDLT on assured tenancies. HMRC's impact note, 28 October 2026: "The measure removes SDLT on the rent element of assured tenancies…" and "SDLT has not been collected on the rent element of assured tenancies from 1 May 2026 in anticipation of that legislation." In England there has been no SDLT, and no return, on assured-tenancy rent since 1 May 2026.

CGT 60-day returns. HMRC's impact note on late-filing penalties, 28 October 2026: "…taxpayers are not subject to ongoing penalties for failure to report a Capital Gains Tax liability which they have subsequently reported." It applies where the disposal "is reported on an Self Assessment tax return delivered from 28 October 2026" (sic): miss the 60-day return and the penalty clock now stops once the sale is on your tax return. The duty itself stays, as GOV.UK still says: "You must report and pay any Capital Gains Tax due on UK residential property within 60 days of completing the sale of the property." So the 60-day return is still the rule; only the open-ended penalties go.

ATED. Annual Tax on Enveloped Dwellings charges rise 3.5% from 1 April 2027: £4,750 for the £500,001 to £1 million band (from £4,600) and £9,750 for £1 million to £2 million (from £9,450).

Business Asset Disposal Relief. John Healey, Chancellor of the Exchequer, Budget 2026 speech, 28 October 2026: "I am reducing the threshold for Business Asset Disposal Relief in Capital Gains Tax from £1m to £500,000, meaning no change for 3 in 4 claimants." The lifetime limit halves for qualifying disposals on or after 6 April 2027; the rate stays at 18%.

Making Tax Digital. HMRC's OOTLAR, paragraph 2.36, 28 October 2026: "the government will not apply late submission penalty points to quarterly updates for the 2027-28 tax year for Income Tax Self-Assessment taxpayers required to join MTD in April 2027." That is written for April 2027 joiners; whether it covers landlords who joined in April 2026 is not stated.

Payments on account. The Chancellor, same speech: "And I am reforming the administration of self-assessed income tax from 2029 bringing more of these taxpayers in line with the majority…" From April 2029, taxpayers who make payments on account will make more regular in-year payments, automated, with an option to pay through PAYE.

Corporation tax is confirmed at 25% (main rate) and 19% (small profits rate) for the year from 1 April 2028, and the government will consult on expanding third-party reporting of property income data. Each of these has conditions the summaries above leave out; check your own position with a qualified tax adviser.

What did not change

Stamp duty, capital gains tax, dividend tax, the main income tax rates and the property allowance all stay where they were.

Residential SDLT rates in England and Northern Ireland are unchanged, as are the 5-point additional-dwelling surcharge and the 2-point non-UK-resident surcharge. CGT on residential gains stays at 18% and 24% with a £3,000 annual exempt amount, dividend rates at 10.75%, 35.75% and 39.35%, and the main rates at 20%, 40% and 45%. No change to the £1,000 property allowance was announced.

The Section 24 finance-cost credit needs care. HMRC's landlord relief guidance, last updated 6 April 2017: "The reduction is the basic rate value (currently 20%)…" That is the credit you get today on mortgage interest.

HMRC's technical note of 26 November 2025 said that from 2027-28 "relief for residential finance costs will be calculated at the property basic rate (22%)". That was written when the property basic rate was going to be 22%.

Finance Act 2026, Schedule 1, paragraph 40 (Royal Assent 18 March 2026), then tied the credit to that rate in law: "…for 'basic rate' substitute 'property basic rate'." In plain terms, the credit now follows whatever the property basic rate is. And HM Treasury's Budget 2026 Policy Costings, 28 October 2026: "Finance cost relief will continue to be aligned to the property basic rate." The Treasury expects that link to hold after the Budget.

What it means in numbers

A higher-rate landlord with £12,000 of rental profit and £6,000 of mortgage interest pays about £240 more a year from 2027-28 than today, half of it from this Budget.

The example assumes other income already uses the personal allowance and basic-rate band, so rent is taxed at the higher rate; from 2027-28 allowances are set against non-property income first.

The middle column is Finance Act 2026 as it stands; the right-hand column is what Budget 2026 announced, with the credit at 24% on the basis set out above. Through a company, mortgage interest is deductible in full, so taxable profit is £6,000 and corporation tax at the 19% small profits rate is £1,140, assuming profits under £50,000. That is before dividend tax at 10.75% or 35.75% when the money comes out, and before the running costs of a company; our guide to buying through a limited company covers both.

Property values and rental income can fall, and returns are not guaranteed. Quartico does not give tax advice; speak to a qualified tax adviser about your own position.

What to do and by when

The first date is 7 November 2026, then 31 January 2027 for Self Assessment, and the big one is 6 April 2027, when the new rates start and Making Tax Digital reaches landlords with qualifying income over £30,000.

• 7 November 2026: MTD quarterly update due. HMRC's penalties guidance, last updated 30 March 2026: "There are no penalties for missing a quarterly update deadline for the 2026 to 2027 tax year." It is still required before you can file.
• 31 January 2027: Self Assessment return and payment for 2025-26.
• Before 6 April 2027: review with an adviser whether to hold in your own name or through a company.
• 6 April 2027: the 24%, 44% and 49% property rates start, and MTD extends to landlords with qualifying income over £30,000.
• Selling: the 60-day CGT return and payment still apply.
• £2m-plus home in England: bills from March 2028; the charge applies from 1 April 2028.
• Watch: the Finance Bill 2026-27 text for the finance-cost credit figure.

By Paul Wyatt · Reviewed by David Jacobs · Published 4 November 2026 · Sources checked 2 November 2026