The Chancellor, Rachel Reeves’ November 2025 Autumn Budget, delivered on November 26th 2025 has given the property sector plenty to think about. For landlords and investors, the November budget 2025 feels like a steady squeeze on margins. Whether it is through direct tax hikes or because allowances aren’t rising with inflation. What we can be certain of is that the government seems intent on getting more revenue from property.
If you have a property portfolio then understanding these changes is key to make sure you protect it. Here is a breakdown of what the November 2025 budget actually means for you as a landlord and how you can handle it.
The November budget 2025 appears to be targeting private landlords (also known as unincorporated landlords – people who own property in their own name and not through a limited company). The changes mean that you will pay more tax as the government has not raised the tax-free income limit. So if you increase your rents to cover the costs, then you will immediately be paying more tax.
If you’re a limited company landlord, Dividend Tax rates are also set to rise by 2% in April 2026. While the corporate structure remains efficient for mortgage interest relief, you will need to factor this higher tax rate into your net profit calculations.
This is the big one. The government is introducing a 2% surcharge on property income starting in April 2027. This will increase the basic rate of income tax on rental profits to 22%, the higher rate to 42% and the additional rate to 47%.
There is a small upside to the November budget 2025 and that is that you will be able to calculate your mortgage interest tax credit at this new 22% rate too. As this is not going to be in place until 2027, you do have a window of opportunity to take a look at your numbers and decide if holding properties in your own name is the best way to manage your portfolio moving forwards.
It is worth noting that this 2% surcharge isn’t limited to just property. From April 2027, the tax rate on savings income will also rise by 2% (to 22%, 42% and 47%).
If you are holding significant cash reserves for portfolio maintenance or tax bills, the interest you earn on that money will be taxed more heavily too. This makes tax-efficient accounts like ISAs even more valuable for holding your contingency funds.
The government has extended the freeze on inheritance tax nil-rate bands until April 2031. The main allowance stays at £325,000.
Because property values generally go up over time, freezing these thresholds means more estates are likely to have to pay inheritance tax. So even if you don’t buy any new properties, your family is likely to pay a lot more tax in 2031 than you are today, simply because house prices will rise but as it stands the tax allowance will stay the same.
Even if you don’t buy any new properties, your family will likely owe significantly more tax in 2031 than they would today, simply because house prices rose but the tax allowance didn’t.
There were no changes to the headline rates of Stamp Duty Land Tax (SDLT). Our view on this one is that no news is good news as it gives you a bit of certainty if you are planning to buy property soon.
On a more positive note, the November budget 2025 has brought new reliefs for business property arrive in April 2026. A new £1m allowance for Agricultural and Business Property Relief (APR/BPR) is coming in. This relief can be beneficial for couples; by balancing asset ownership between spouses, you can effectively double this allowance to £2m. For family-run portfolios, this new relief makes commercial assets a highly attractive option.
The budget confirmed a “High Value Council Tax Surcharge” for residential properties in England worth over £2 million, starting April 2028.
This is an extra annual charge on owners, not tenants. The tiers are:
The Valuation Office will revalue properties in 2026. If you own luxury property, this gives you a timeline to decide if you want to sell or restructure before these new charges are introduced in April 2028.
For landlords who use salary sacrifice pension schemes to manage their marginal tax rate, be aware of the new cap coming in 2029. Only the first £2,000 of salary sacrifice contributions per year will remain exempt from National Insurance. This may reduce the tax-efficiency of moving rental income into your pension to stay out of the higher rate bands.
You often hear the term “fiscal drag.” It sounds technical but it’s actually quite simple. It happens when the government freezes tax brackets while your income goes up.
As rents rise with inflation, you might find more of your income falling into a higher tax band even though the tax rates haven’t technically changed. It is a quiet way for your tax bill to creep up over time, eating into your returns without you immediately noticing.
The Chancellor announced reforms to investment schemes to close loopholes. If you use specific investment structures, you should probably review them to make sure they are still compliant.
With the National Living Wage set to rise by 4.1% in April 2026, landlords who employ their own maintenance teams or administrative staff through a limited company should budget for higher payroll costs next year.
Sometimes what isn’t said is just as important. There was no major change to main home relief and no wealth tax. Calls to cut Stamp Duty to get the market moving were also ignored. The approach appears to be about steady revenue raising rather than shaking up the whole system.
With personal property tax rates hitting a new high of 47% in 2027, the gap between personal ownership and corporate ownership has widened significantly.
Corporation Tax remains capped at 25% (and is just 19% for profits under £50,000). This “tax arbitrage”, paying 25% inside a company versus up to 47% personally is driving many investors to restructure.
Note: It is important to look at how both options have been impacted, owning property personally vs owning property through a limited company. The Budget also announced a 2% rise in Dividend Tax (effective April 2026), meaning extracting profits from a company will cost slightly more. However, for investors focused on growth and reinvesting profits rather than immediate income, the company structure now offers a far superior shelter from the new tax hikes.
Navigating this takes a bit of planning. The combination of tax hikes and frozen allowances means you have to be smarter with your strategy. Here at Prosperity Group, we help investors make sense of this.
We are more than just property developers; we are a full-service investment partner with over 30 years of industry experience who are dedicated to making property ownership accessible, profitable, and stress-free.
We believe property should be a solid, understandable asset. Here is how we help you manage it:
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Oliver Thacker is a Property Investment Consultant at Prosperity Group. He started in local and national estate agencies before moving into the investment world. He uses that practical knowledge to help clients build portfolios that actually work for them.
The most significant change for landlords in the November budget is the new 2% surcharge on property income, which pushes the basic tax rate on rental profits to 22% and the higher rate to 42%.
The fiscal drag effect on rental profit is where your rental income goes up, but frozen tax thresholds mean more of that money gets taxed at a higher rate. Your bill goes up even if the tax percentage stays the same.
This article isn’t financial advice, but these changes certainly suggest you should look at your setup. It might be time to explore using limited companies or speaking to a specialist to make sure you aren’t paying more tax than you need to. We have a team of specialists, so if you need to navigate how the November Budget 2025 has impacted landlords then you can get in touch with us on +44 (0) 121 237 4610 or send us a message via the form on our contact page.
