10 min read
The UK government released the Autumn Budget 2025 on 26 November, outlining a new direction for tax policy. Instead of raising income tax or VAT — which would impact almost every household — the Chancellor, Rachel Reeves, has focused on wealth, high-value property, and long-term assets.
Whether you are a landlord with several properties, a small business owner juggling multiple income streams, or someone running a side hustle alongside a main job, the way the government taxes wealth and property can affect you in different ways. This blog breaks down the key changes and what they mean in practical terms.
Key changes for landlords and property owners
Property sits at the centre of this year’s Budget. While not all landlords will be directly affected, those with higher-value assets or plans to buy or sell soon should pay close attention.
1. A new annual surcharge for high-value homes
One of the headline announcements is the introduction of an annual charge on residential properties worth £2 million or more, commonly known as the mansion tax.
The structure is tiered:
Threshold | Rate (£) |
£2m – £2.5m | £2,500 |
£2.5m – £3.5m | £3,500 |
£3.5 – £5.0m | £5,000 |
£5m+ | £7,500 |
This is intended to raise around £400–£450 million per year and shift a portion of the tax burden toward wealthier homeowners. This “high value council tax surcharge” will be collected in addition to the current council tax from April 2028 and based on new targeted valuations. It will be home owners, not occupiers, who will be expected to pay.
Who this affects:
Only a small number of landlords — usually those holding high-end London or South-East properties, often through limited companies or family structures. Most regional and standard buy-to-let landlords will not be caught by this change.
2. Higher taxation on rental (property) income from April 2027
The Budget raises tax rates on income from property to bring them closer to employment income:
- Basic rate: 22%
- Higher rate: 42%
- Additional rate: 47%
Landlords should consider this when calculating net rental yields, especially on high-value properties.
On the positive side, the anticipated NI charge on landlord profits from rental income did not come to fruition.
3. Inheritance Tax (IHT) and relief changes affecting property, business, and agricultural assets
- The nil-rate band and residence nil-rate band remain frozen until April 2031.
- The combined £1 million allowance for 100% Agricultural and Business Property Relief remains. From April 2026, any unused portion can be transferred between spouses or civil partners.
These changes may affect estate planning and multi-generation property transfers.
4. Planning considerations for landlords and high-value property owners
- The surcharge will be recalculated every five years, so rising property values or inflation could gradually pull more properties into scope.
- The government will consult on potential deferral options for owners with limited liquidity, which may benefit retirees or cash-poor owners of high-value homes.
- For rental-property investors, higher income-tax rates combined with the potential surcharge may reduce overall returns.
What the budget means for small businesses and self-employed earners
The Autumn Budget 2025 provides a mix of stability, opportunities, and new challenges for small businesses. While tax rates remain largely unchanged, there are important updates that business owners should be aware of.
Dividend and investment income taxes rise
From April 2026, dividend tax rates increase by 2 percent. The basic rate rises to 10.75%, and the higher rate to 35.75%. From April 2027, taxes on savings and rental/property income will also rise. This reduces take-home returns for business owners relying on dividends or passive income, making retaining profits or reinvesting in the business a more tax-efficient option.
Minimum wage increases
The National Living Wage for workers aged 21+ rises to £12.71/hour from April 2026. Younger workers and apprentices also receive higher rates. Labour-intensive SMEs, including distribution, warehousing, and service businesses, should plan for higher staffing costs, which may affect profit margins and cash flow.
Freeze on tax and NIC thresholds
Income tax and National Insurance thresholds remain frozen until at least 2031. This means as wages increase with inflation, more employees and business owners will be pushed into higher tax or NIC bands, raising overall costs over time.
Changes to salary-sacrifice pensions
From April 2029, only the first £2,000 per employee in salary-sacrifice pension contributions will remain exempt from NICs. Contributions above this limit will attract employer and employee NICs, reducing the long-term benefit of tax-efficient remuneration schemes.
Business rates relief for certain sectors
Retail, hospitality, and leisure businesses with properties under £500,000 will benefit from permanently lower business rates, easing overheads and freeing cash for growth or investment. Businesses outside these sectors, like industrial supply or distribution, may see limited direct benefit.
Who will feel the impact most?
These changes will not affect everyone in the same way. Some people will feel the impact more, especially those with expensive homes or large assets. Others may see little to no change. Here’s a quick look at who is likely to be affected and who is not.
Most affected:
- Landlords with homes over £2 million
- Investors disposing of business or rental assets
- Owner-managed businesses reliant on dividends
- High-value asset owners planning wealth transfers
Moderately affected:
- SMEs with labour-intensive operations
- Small landlords of lower-value properties
- Individuals with significant dividend, savings, or rental income
Least affected:
- Self-employed people with modest turnover
- Middle- and lower-income households
- Renters and those without significant property or investment wealth
However, long-term decisions like selling assets or passing wealth to family, may need to be reviewed in light of the new rules.
Why the government is making these changes
he UK faces a challenging fiscal environment, and the government is trying to raise revenue without increasing taxes that hit the majority of working households.
They have focused their tax raising on:
- High-value homes
- Asset sales Investment income
- Wealth transfers
aiming to generate income from people with greater financial capacity without adding pressure to modest earners or small businesses.
However, high-value property owners who are “asset-rich but income-poor,” such as older landlords, may feel squeezed by recurring charges.
Conclusion
The Autumn Budget 2025 shifts more tax onto wealth and assets. For landlords, this means watching property tax and CGT changes closely. For small businesses and self-employed people, income tax and VAT stay the same, but dividend and investment changes may still affect your plans.
If you want to understand how these changes affect your property, business, or personal finances, Golding is here to help.
