More misery for landlords

There was a time that it seemed that every client was talking to me about investing in a buy to let, but over the past decade I’ve watched my landlord clients suffer one tax hit after another and yesterday’s Autumn budget was no different.

By Chris Davies – Partner

Last year’s Budget added 2 percentage points to the tax on property income from April 2027. Yesterday, another 2 points were added so from 6 April 2027, rental profits will be taxed at:

• 24% for basic-rate taxpayers (currently 20%)
• 44% for higher-rate taxpayers (currently 40%)
• 49% for additional-rate taxpayers (currently 45%)

A higher-rate landlord with £30,000 of rental profit will pay around £1,200 more each year.

In recent years we have seen:

• Mortgage interest relief restricted to the basic rate
• The wear and tear allowance scrapped
• The stamp duty surcharge on additional homes, now 5%
• The CGT annual exemption cut from £12,300 to £3,000
• Making Tax Digital, and the cost of complying with it
• The Renters’ Rights Act and its new obligations

Most of my clients are not large portfolio clients but individual’s with one or two properties who invested to assist them with their pension income and it’s hard not to feel than they have been seen as an easy target.

Tax planning is now more important than ever, and it is definitely worth considering whether a company structure or other mitigation steps could help.

If you’re a landlord feeling the squeeze, contact us today!

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