The Budget is just one month away: What could it mean for Landlords? 💶💵
CAVENDISHEXPERTS! The logical choice for Lettings, Sales and Property Management in Nottingham | Cavendish Residential | One Fletcher Gate NG1 1QS | 0115 941 0656 | www.cavendishproperty.co.uk
The new Government's first Budget is now just one month away. Chancellor John Healey will deliver his first Budget on Wednesday 28 October 2026.
For landlords and property investors, Budgets always attract plenty of speculation.
Will property taxes change? Will landlords face additional costs? Will investment be encouraged or discouraged?
We'll know the answers soon enough.
Rather than trying to predict what might be inside the Chancellor's red box, we thought this was a good opportunity to look at the taxes landlords already need to understand, including one significant change that is ALREADY on its way. 🔍
💷 1. INCOME TAX on rental profits
For individual landlords, rental profit forms part of taxable income.
For the current 2026/27 tax year in England, the standard Income Tax bands are:
🔸 Personal Allowance: up to £12,570
🔸 Basic rate: 20%
🔸 Higher rate: 40%
🔸 Additional rate: 45%
The amount a landlord actually pays depends upon their individual circumstances and other income.
And there is another important distinction.
Rental income is not the same as rental profit.
Management fees, insurance, repairs and certain other legitimate property expenses can potentially affect taxable profit, depending upon the circumstances and applicable tax rules.
Mortgage finance costs for individual residential landlords also have their own specific tax treatment.
In other words:
RENT ≠ PROFIT ≠ CASH IN YOUR POCKET.
Understanding the difference is fundamental to understanding how an investment is really performing. 🧮
🚨 But something IS already changing...
Here's where things become particularly relevant.
Regardless of what happens in October's Budget, legislation has already introduced separate Income Tax rates for property income from the 2027/28 tax year.
Those rates will be:
🔹 22% property basic rate
🔹 42% property higher rate
🔹 47% property additional rate
That's two percentage points above the corresponding current main rates.
So while October's Budget may bring further announcements, landlords shouldn't confuse speculation about what MIGHT happen with changes that have already been legislated.
This one is already on the horizon.
🏠 2. STAMP DUTY LAND TAX when you BUY
Tax doesn't only affect the income from a property.
For investors, it can begin on the day they buy it.
Purchasers of additional residential properties in England generally face higher Stamp Duty Land Tax rates.
At the time of writing, these are:
🔸 5% on the portion up to £125,000
🔸 7% between £125,001 and £250,000
🔸 10% between £250,001 and £925,000
🔸 15% between £925,001 and £1.5 million
🔸 17% above £1.5 million
For an investor, this matters because the purchase price isn't necessarily the total amount of capital required to acquire the investment.
Stamp Duty, legal costs, mortgage costs and any initial works may all sit alongside it.
That's why a headline rental yield should never be considered completely in isolation.
📈 3. CAPITAL GAINS TAX when you SELL
At the other end of the investment journey is the eventual sale.
If a landlord disposes of a rental property for more than its relevant acquisition cost, Capital Gains Tax may become payable on the taxable gain after applicable costs, reliefs and allowances.
For the current 2026/27 tax year:
🔹 The individual annual CGT exempt amount is £3,000
🔹 The main CGT rates are 18% and 24%, depending upon the taxpayer's circumstances
Again, the individual calculation can be considerably more complicated than simply taking the sale price and subtracting the original purchase price.
For landlords thinking about selling one property, restructuring a portfolio or planning a longer-term exit, understanding the potential tax position BEFORE making decisions can therefore be important.
👨👩👧👦 4. INHERITANCE TAX and longer-term planning
This was one of the four taxes in our original landlord article and it remains worth having on the radar.
Property can represent a substantial part of someone's overall estate.
The standard nil-rate band is currently £325,000 and the standard Inheritance Tax rate is generally 40% on the part of an estate above the relevant available thresholds.
There can also be a residence nil-rate band in qualifying circumstances, although the rules around estates, property and inheritance can become complicated very quickly.
For a landlord with one rental property it may seem like a distant consideration.
For someone who has spent 20 or 30 years building a portfolio, it may be anything but.
Long-term property investment eventually becomes long-term financial and estate planning. 🏘️
🔍 So what should landlords WATCH in the Budget?
We aren't going to make predictions.
There will be plenty of those between now and 28 October!
Instead, landlords and investors may want to pay attention to any announcements affecting:
🔹 Taxation of property income
🔹 Stamp Duty and the cost of acquiring additional property
🔹 Capital Gains Tax and the cost of selling investments
🔹 Inheritance and estate planning
🔹 Limited companies and property investment
🔹 Allowances, thresholds and reliefs
🔹 Any measures specifically affecting the private rented sector
Some announcements may have an immediate effect.
Others may be proposed for future tax years.
And some of the things being discussed in newspapers before the Budget may never appear in it at all.
That's why we prefer FACT to speculation. 🎯
🌸 The Cavendish perspective
If you own rental property, you aren't simply collecting rent.
You're holding an investment with an acquisition cost, an income stream, ongoing expenditure and, eventually, an exit.
Tax can touch every stage of that journey:
BUY ➡️ OWN ➡️ EARN ➡️ SELL ➡️ PLAN
Stamp Duty can affect the cost of BUYING.
Income Tax can affect the return while you OWN and LET.
Capital Gains Tax can affect the proceeds when you SELL.
Inheritance Tax can become relevant to longer-term family and estate PLANNING.
Individually, each tax is different.
Collectively, they can have a significant bearing on the financial performance of a property portfolio.
And with a Budget just one month away, now seems a sensible time for landlords to understand their CURRENT position before considering whatever the Chancellor announces next. 📊
🛑 A VERY IMPORTANT NOTE
Cavendish Residential is not a tax adviser and nothing in this article should be regarded as tax, accounting or financial advice.
Tax treatment depends upon individual circumstances and can change.
Our role is to make landlords and investors aware of the wider considerations surrounding property ownership so they know when specialist advice may be appropriate.
Awareness doesn't replace professional advice.
But it can help you ask the RIGHT questions.
📧 If you are a Cavendish landlord and would like to discuss the wider performance or future strategy of your property or portfolio, contact Scott Sneath at scott.sneath@cavendishproperty.co.uk.
Where specialist tax advice is required, we can recommend that appropriate professional advice is obtained.
If you would like to understand how these four taxes may apply to your individual circumstances, email Scott Sneath, Finance Director at Cavendish Residential (pictured second from the left below). Scott can discuss your position and, where appropriate, introduce you to a professionally qualified tax specialist (scott.sneath@cavendishproperty.co.uk) 📧
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