Budget 2026: turning point for landlords hit by higher tax on income

Jonathan Amponsah, CTA FCCA, founder and CEO, The Tax Guys . Croner.

Second hike in tax on property income is a blow for landlords already dealing with higher running costs, says Jonathan Amponsah, founder of The Tax Guys.

In a Budget of few major announcements, the one thing that caught my eye is the additional increase in property tax at a time when private landlords are grappling with the new Renters Right Act.

For over a decade, landlords have been dealing with adverse tax changes, and I was surprised to see another increase.

For landlords already managing higher mortgage costs, maintenance bills and regulatory requirements, these changes could prove a significant turning point.

The new rates will rise to 24% for basic rate taxpayers, 44% for higher rate and 49% for additional rate, adding to the earlier 2% increase announced last year. The higher rates come into effect from 6 April 2027 leaving limited time to plan.

As landlords reassess the viability of their investments, questions emerge over whether some will sell, reduce their exposure to the sector or seek to restructure their portfolios.

There might be a knee jerk reaction to put property portfolios into a limited company. This move has pitfalls, and I urge landlords to seek advice first.

The Budget underlines the importance of taking a strategic approach to property investment rather than treating tax as an issue to address at the end of the financial year.

Landlords cannot afford to look at this latest change in isolation. The real issue is how taxation affects the overall return on a property, the amount of capital tied up in it and the long-term viability of the investment.

Current ownership structure, borrowing, portfolio performance and future investment plans can all influence decisions. There is no single solution that works for everyone, but doing nothing and hoping the numbers still add up is not a strategy.

With the changes approaching, my key advice is for landlords to understand the numbers and remove emotions from their decision making process. Landlords need to understand the options available to them before making significant decisions about selling, refinancing or restructuring their holdings.

About the author

Jonathan Amponsah is founder and CEO of The Tax Guys and CleanBooks MTD