Chancellor Rachel Reeves presented the Autumn budget in late November, following a quarter filled with rumours of changes to Stamp Duty, Capital Gains tax and a possible Mansion Tax. The Budget itself covered far less than what was anticipated.
Key tax and allowance changes affecting property
Property income tax has gone up from April 2027, impacting landlords across the country. A 2 percent increase to the basic, higher and additional rates of tax means the new percentages will be 22%, 42% and 47%.
Following the same route, from April 2026, the ordinary and upper rates for dividend income has increased to 10.75% and 35.75% respectively.
The main rate of writing down capital allowances has been reduced to 14% from April 2026, impacting items that are noted as fixtures within buildings. However, the new First Year allowance of 40% that is coming into play in January 2026 will benefit property investment companies that lease properties.
Business rates reform and market impact
April 2026 also brings an update to business rates. This is to ensure the rateable values of properties are in line with the market and market changes.
The overall changes, whilst vast, impact real estate transactions in a variety of ways. The lack of changes to SDLT gives purchasers more certainty and provides them with a degree of stability in the market.
The business rates update is a major reform, bringing a new system into place. Higher valued properties will be subject to a higher multiplier- which increases their overall tax burden. Owners of large offices and commercial buildings will be impacted by the change.
In a positive turn for retail, hospitality and leisure properties, the revenue obtained from the high value properties will fund their lower business rates. The government’s aim of revitalising the high street lies with bringing in more investment and lower business rates may attract the same.
Overall, the budget has brought in a range of changes, some of which have resulted in uncertainty with developers, investors and clients. However, it looks like that the pro-growth measures, which also include reforms to the planning systems, may lead to new opportunities for development.
If you would like expert advice on how these changes may impact your real estate investments, transactions or development plans, please contact Lekhika Chaudhary and our Real Estate team.