You will have seen it on the news, and read it on your socials, but here is a summary of the main changes announced by the Chancellor yesterday.
There have been no changes to Capital Gains Tax (CGT) or Inheritance Tax (IHT) rates, SDLT, or Principal Private Residence relief in the budget.
It was also announced that the Personal Allowance and tax thresholds will remain frozen for another three years. With rents continuing to rise, this will push more property investors into higher tax bands.
If you have any questions or need clarification of any of the above changes, please get in touch with your client manager at Calculated.
Key changes
- Mortgage interest relief rises from 20% to 22% from
- Income from Property, Savings and Dividends Tax Increase: All rise by 2 percentage points.
The new rates on dividend income will apply from 6 April 2026, and on savings and property income from 6 April 2027. For taxpayers whose tax is collected through their tax code, the new rates will be applied by HMRC when they become effective.
Dividend Income (from April 2026)
- Tax increases by 2 percentage points.
- Basic rate: 8.75% → 10.75%
- Higher rate: 33.75% → 35.75%
- Additional rate: unchanged at 39.35%
Savings Income (from April 2027)
- Tax increases by 2 percentage points across all bands.
- Basic rate: 20% → 22%
- Higher rate: 40% → 42%
- Additional rate: 45% → 47%
Property Income (from April 2027)
- New standalone tax rates introduced.
- Property basic rate: 22%
- Property higher rate: 42%
- Property additional rate: 47%
- Finance cost relief given at the 22% property basic rate
A basic illustration.
For a client with 20K rental income, £8500 expenses and £5000 mortgage interest:
(assuming personal allowance has been used & basic rate of income tax )
| Currently | Currently | From April 2027 | From April 2027 |
| Income | £20,000 | £20,000 | |
| Expenses | £8,500 | £8,500 | |
| Profit | £11,500 | £11,500 | |
| Tax @ 20% | £2,300 | Tax @ 22% | £2,530 |
| Mortgage Interest | £5,000 | £5,000 | |
| Tax Credit @ 20% (mortgage interest relief) | £1,000 | Tax Credit @ 22% (mortgage interest relief) | £1,100 |
| Tax Due to HMRC | £1,300 | £1,430 |
Other Changes
- Income Tax & NI Thresholds: Frozen until 2031
- Pension Salary Sacrifice: from April 2029. New £2,000 annual cap on the amount that is exempt from National Insurance contributions (NICs).
- Mansion Tax: from April 2028: Introduction of an annual charge of £2,500 for homes over £2m and £7,500 for homes over £5m.
- Minimum Wage Increase: from April 2026 National Living Wage rises to £12.71/hour for over-21s.
- Electric Vehicle Mileage-Based Charge: from April 2028: introduction of a mileage-based charge of 3p per mile (EVs) and 1.5p per mile (hybrids).
- Two-Child Benefit Limit Lifted: from April 2026: If you are a higher rate tax pay, it is worth reading our October 2025 newsletter for more information about the High Income Child Benefit charge.
- ISA Reform: from April 2027: £20,000 allowance retained, but only £12,000 can be held in cash ISAs for those agreed under 65.
- Non-Resident Landlords (who have not applied to receive rents gross) will be subject to withholding at the new basic property income tax rate of 22% from April 2027.
- Significantly, this will also apply to Property Income Distributions from REITs and PAIFs.
- Business Rates Relief: Over 750,000 retail, hospitality and leisure properties receive tax cuts.
- Higher Commercial Rates: Larger commercial properties over £500,000 face increased rates to fund small business rates relief.
- Writing Down Allowances: Main WDA drops from 18% to 14% in 2026, with a 40% first-year allowance for main rate assets starting 1 January 2026
Mortgage & Investment Market Update
Post-Budget Summary for Landlords, Investors & Regional Markets
Iain Watts, our Senior Mortgage Advisor at Calculated makes the following observations:
The recent Budget delivered stability rather than surprise, and that has generally been welcomed across the landlord and property-investment space. While no major new measures were introduced to support or restrict the private rented sector, the government’s steady fiscal stance has contributed to calmer financial markets and slightly improved rate expectations. With inflation continuing to ease, lenders are gradually adjusting their pricing outlook, providing a more predictable environment for investors considering refinancing or portfolio expansion.
Buy-to-let lending conditions have also shown signs of improvement, with more competitive fixed-rate products and renewed appetite from specialist lenders. Although stress-test constraints still limit maximum borrowing in some cases, modest reductions in fixed rates have helped strengthen affordability metrics. For landlords refinancing from older low-rate mortgages, costs will still be higher, but the landscape is far less volatile than this time last year — aiding long-term planning and cash-flow forecasting.
Across the regions, market performance remains varied. Stronger rental demand continues to underpin yields in areas such as the North West, Midlands and well-connected commuter belts, making them attractive targets for yield-focused investors. Regions that experienced steeper price rises during the pandemic are now seeing gentler corrections, presenting opportunities for value-driven buyers. With no significant housing-market interventions in the Budget, these localised dynamics will continue to shape investment prospects more than national policy shifts.
Overall, the Budget reinforces a tone of cautious optimism. Stability in rates, resilient rental demand, and improving lender competition all help create a more navigable environment for landlords and investors. As the interest-rate cycle evolves over the coming months, reviewing refinancing opportunities and exploring regional yield potential may offer strategic advantages.
If you’d like to discuss your mortgage needs — whether for refinancing, expanding your portfolio, or assessing new opportunities — feel free to book in a call. I’m always happy to help.
To book a call with Iain Watts use the button below.
Disclaimer:
This commentary is for general information only and does not constitute financial, tax or legal advice. Mortgage availability, rates and tax rules can change, and individual circumstances vary. Always seek tailored professional advice before making investment or borrowing decisions.
