The current UK property tax landscape brings many challenges and complexities – for both landlords and homeowners. Policy updates, frozen thresholds and a change in government are all contributing to many property owners feeling the pinch, under pressure and uncertain about what’s to come.
But knowledge is power – so in this post we’re discussing the new and rumoured tax changes and what they mean for you.
New property tax rules
There are two main changes that have been confirmed for property tax:
High Value Council Tax Surcharge (HVCTS)
Nicknamed the ‘mansion tax’, the HVCTS was first announced during the 2025 Autumn Budget by the then-chancellor Rachel Reeves. Coming into effect in April 2028, this new annual charge will apply to residential properties in England worth £2 million or more in 2026. It will be administered alongside council tax (but given to the HM Treasury rather than local councils) and the surcharge will vary depending on property value – with homeowners expected to pay between £2,500 and £7,500 a year.
The current rates are as follows:
| Property value | Annual rate |
| £2 million to £2.5 million | £2,500 |
| £2.5 million to £3.5 million | £3,500 |
| £3.5 million to £5 million | £5,000 |
| Over £5 million | £7,500 |
It’s worth noting that property owners – not occupants – will be liable for this tax.
There are also rumours that new PM Andy Burnham could lower the HVCTS threshold to £1.5 million, although there’s no concrete evidence to support this claim.
Property income tax rates
Another announcement made in last year’s Budget was the rise of property income tax rates. These will increase by 2% in April 2027 to the following:
| Tax bracket | New rate |
| Basic rate | 22% |
| Higher rate | 42% |
| Additional rate | 47% |
According to the Office for Budget Responsibility, these new rates will bring in an extra £500 million a year. But critics are warning that it could have a huge impact on individual landlords and potentially push them to leave the industry altogether.
Could we see further property tax changes?
There’s been lots of speculation surrounding further tax changes ahead of the upcoming Budget. Let’s take a look at some of the rumours:
Stamp duty/council tax reform
There have been plenty of talks about the abolishment of stamp duty and/or council tax and how they could be replaced with a single annual tax – either a land value tax or proportional property tax.
These rumours stem from the fact that the new PM has openly criticised the council tax system for being outdated and unfair. He has, however, confirmed that this won’t be a focus in this year’s Autumn Budget. But could we see a reform later down the line? It’s definitely something to keep an eye on.
Capital gains tax (CGT) reform
Home owners and landlords are required to pay CGT on the sale of a property that isn’t their main home. But Burnham’s views on the taxation of wealth vs. labour have led to speculation that a change could be on the cards – either by means of a tax rise or an adjustment so that it better aligns with income tax rates.
What do these changes mean for you?
Whether you’re a landlord or a homeowner, these new property tax rules are likely to affect you and the way you manage your finances. And as we approach another Budget (from an entirely different leadership), it’s understandable to feel apprehensive or a sense of uncertainty.
But that’s what we’re here for. Our experienced and dedicated team of property tax accountants will help you manage your portfolio, understand your tax responsibilities and what upcoming changes will mean for you personally, and ensure you’re getting the best support possible. Why not arrange a free, no-obligation consultation to see if we’re the right fit for you? You can also contact your local office directly on this page.
