The Autumn Budget 2025 and subsequent fiscal events introduce several changes that affect landlords in the UK. The most immediate change from April 2026 is the mandatory start of MTD ITSA for landlords with property income above £50,000. From April 2027, property income tax rates will rise by two percentage points at all income tax bands. The Budget also confirmed changes to IHT relief on agricultural land and a new annual charge on high-value residential properties from 2028.
Property income tax: what is changing
The tax treatment of rental income is about to become more expensive. Whilst no new rates applied immediately in the Autumn Budget 2025, two significant changes are confirmed in the pipeline:
- From April 2027: Tax on property income rises by 2 percentage points at all rates. Basic rate landlords will pay 22% instead of 20%. Higher rate landlords will pay 42% instead of 40%.
- Frozen thresholds to 2031: Rising rents and values push more landlords into higher rate bands without any nominal rate change.
| Rate band | Current | From April 2027 |
|---|---|---|
| Basic rate property income | 20% | 22% |
| Higher rate property income | 40% | 42% |
| Additional rate property income | 45% | 47% |
MTD ITSA for landlords
From 6 April 2026, landlords with property income above £50,000 must join Making Tax Digital for Income Tax Self Assessment. This requires:
- Compatible accounting software to record income and expenses
- Four quarterly digital submissions to HMRC per year
- An end-of-period statement and final declaration at year end
The threshold reduces to £30,000 from April 2027 and to £20,000 from April 2028, meaning the majority of landlords with meaningful rental income will be required to use MTD ITSA within the next two years.
A soft landing applies in 2026/27: no penalty points for missing the first four quarterly updates. However, the annual final declaration still carries penalties if missed.
Inheritance Tax changes affecting landlords
Agricultural land held in the UK is now always subject to Inheritance Tax, even if held through a non-UK entity. Previously, certain offshore structures provided IHT shelter for UK agricultural land. This change applies from April 2026 and mirrors the existing treatment of UK residential property.
Agricultural Property Relief and Business Property Relief have also changed from April 2026. Full 100% relief is now capped at a combined total of £2.5 million across both reliefs. Qualifying assets above this amount attract 50% relief rather than 100%. Landlords with significant agricultural holdings should seek specialist IHT advice.
New annual charge on high-value residential properties (from 2028)
From April 2028, an annual charge will apply to residential properties valued at £2 million or more (at 2026 prices). The charges are:
| Property value | Annual charge |
|---|---|
| £2m to £5m | £2,500 per year |
| £5m and above | £7,500 per year |
This will apply to individual homeowners as well as landlords and investors. For landlords with high-value properties, this is an additional annual cost to factor into yield calculations.
Capital Gains Tax on property
The main CGT rates for residential property are 18% (basic rate) and 24% (higher rate), following the changes announced in the 2024 Budget. No further changes were announced in Autumn Budget 2025. The annual CGT exemption remains at £3,000.
Planning for landlords
- Check whether your property income exceeds £50,000 and prepare for MTD ITSA if so.
- Obtain compatible accounting software for quarterly reporting.
- Review IHT exposure on agricultural land given the new rules from April 2026.
- Model the impact of the April 2027 property income tax rises on your portfolio yield.
- For high-value properties, factor in the 2028 annual charge in long-term holding decisions.