Budget deep dive: Everything you need to know
As the dust settles on the John Healey’s first Budget as chancellor, our head of policy Charles Pitt takes a deep dive into the detail and how the measures announced on Wednesday will affect you.
While the four percentage point tax hike on property income stole the headlines, Wednesday’s budget also included other news for landlords including proposed changes to Making Tax Digital, clarity on Stamp Duty and the mansion tax.
Voices from across the sector and beyond have agreed with our argument this latest tax raid on you and your businesses will only lead to higher rents for tenants - and we have crunched some of the numbers to see what that increase could be.
How much can we expect rents to rise?
By our calculations, a basic rate taxpayer letting a flat in London would need to increase the monthly rent by £123 to cover the new tax rate.
The equivalent rent rise needed in Manchester would be £73 and in Cardiff £62.
While these figures necessarily make some assumptions about landlords’ costs, bodies including the Office of Budget Responsibility (OBR) have highlighted the risk the changes pose.
The OBR has a statutory duty to examine and report on the sustainability of public finances and is independent of Government and has concluded the new taxes on landlords “represent a material reduction in returns to private landlords. This follows various measures over the past 10 years that have also reduced private landlord returns.”
You can read more reaction on this here.
Making Tax Digital
It was also revealed that landlords and sole traders who will be brought into the scope of Making Tax Digital for income tax in April next year will not receive penalty points for late submission of their first four quarterly reports. This is line with the rules for those impacted this financial year.
The Budget also revealed the government will exempt the following groups from MTD further notice: those eligible for qualifying care relief, non-UK resident foreign entertainers and sportspeople and expected non-resident customers. Secondary legislation will be introduced before April 2027.
The phasing remains unchanged. From April 2026 mandatory implementation for self-employed individuals and landlords with a qualifying income over £50,000 came in. The threshold drops to £30,000 in April 2027 and is due to reduce to £20,000 in April 2028.
Income tax self-assessment (ITSA)
The Government has consulted on plans to require those paying tax through ITSA to do so earlier and more frequently. Currently tax can be paid up to 22 months after the relevant income is earned, meaning large bills and potential tax debt. From April 2029 anybody who pays tax via self-assessment and expects to earn more than £1,000 in a year will have to pay more often, making regular, smaller payments throughout the year, rather than large lump-sum payments long after income is earned.
Removing Stamp Duty Land Tax (SDLT) on rent under assured tenancies
The Government will remove SDLT on rent paid under assured tenancies in England effective from May 1 this year. The Renters’ Rights Act abolished fixed-term assured shorthold tenancies, making all tenancies periodic. Consequently, the net present value of rent (i.e. the total rent paid over many years) could increase above the £125,000 threshold for stamp duty for many more renters. The NRLA raised this issue with the Government and welcomes the confirmation that it will be removed. The changes were confirmed in the Budget and will be introduced in the Finance Bill 2026-27.
Mansion tax
Commonly known as the “mansion tax”, HVCTS is a new annual charge on residential properties, paid by the owner, in England worth £2 million or more. This was announced in last year’s Budget, and this year the Treasury has confirmed it will take effect in April 2028.
In the Budget the Government published a Summary of Responses to consultation, confirming it will introduce a deferral scheme, a series of discounts and exemptions, and a 100% premium on properties left empty and unoccupied for 12 months or more. HVCTS applies to England only and this measure will be introduced through Finance Bill 2026-27.
Rental income data
The Government will consult on expanding third-party reporting requirements for property income data, placing additional duties on letting agents and deposit schemes.
Support for households with the cost of energy
The Chancellor announced a new scheme to provide a £100 payment directly into bank accounts for households in England in council tax bands A-D, supporting up to 20 million households.
Council taxpayers who pay by direct debit will receive the £100 directly into the bank account that they use to pay it. Students in halls will not get the payment because student halls are not in council tax bands A-D. Students living in a property that does fall into bands A-D will get the payment, but as students do not pay council tax, local authorities will be responsible for sorting out the payments.
Photo credit: @houseofcommons
