The Chancellor's recent Autumn Budget delivered two significant tax announcements that will directly impact the property sector. Whether you own a premium property or generate rental income, these changes deserve your attention.
The headline announcements include a new "super council tax" on homes valued above £2 million—often referred to as a mansion tax—and a 2% increase across all landlord property income tax rates. The Government expects these measures to raise around £400 million from the mansion tax and £2.1 billion from higher property, dividend, and savings income tax combined.
As the Chancellor put it, the aim is to ensure that "a £2 million mansion doesn't pay less tax than a family home."
When: From April 2028
What: A new annual charge on properties valued over £2 million, on top of existing council tax
How it works: Properties will be placed into value-based bands, with charges rising each year in line with CPI inflation from 2029–30 onwards.
This announcement adds significant pressure to the prime property market, particularly in London where demand has already softened due to proposed changes to non-dom rules. Many international buyers are now choosing to rent rather than purchase, which could reshape the luxury rental market.
Landlords were hoping for relief after recent financial pressures—mortgage interest relief restrictions and stamp duty surcharges have already hit the sector hard. Unfortunately, the Budget confirmed a further blow: a 2% increase across all property income tax bands, effective from April 2027.
The new rates will be:
These rates apply across England, Wales, and Northern Ireland.
The Chancellor justified the increase by highlighting a perceived fairness issue: a landlord earning £25,000 a year from property currently pays less tax than a tenant earning the same income, due to National Insurance differences. Rather than adjusting National Insurance rules, the Government has opted to raise landlord income tax rates instead.
The combination of mansion tax and higher income tax rates represents a significant shift in the Government's approach to property taxation. For professional landlords, this means:
The property sector faces an increasingly challenging tax environment. Combined with the Renters' Rights Act reforms coming in May 2026, landlords need to be proactive about compliance, tax planning, and operational efficiency.
Ready to navigate these changes? Our team can help you understand the impact on your specific situation and develop a strategy to protect your investment.
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