UK Autumn Budget: Five minute guide for residential property owners

The Chancellor, Rachel Reeves, delivered the Budget on 26 November 2025, with stability and rebuilding the UK economy being a key theme. After months of speculation and leaks of potential measures, the changes announced are more modest than originally feared.

The headline points for residential property owners and investors are:

• Changes to income tax on property income – from April 2027, the tax rate on property income will increase by 2% to 22% for basic rate, 42% for higher rate and 47% for additional rate taxpayers. Relief for residential finance costs will be calculated at the property basic rate of 22%.
• New High Value Council Tax Surcharge (or the so called ‘Mansion Tax’) – from April 2028, there will be a new annual charge for owners of residential property in England worth £2 million or more. The surcharge falls into four bands between £2,500 per annum (for properties valued in the lowest band between £2 million to £2.5 million) and £7,500 per annum (for properties in the highest band worth £5 million or more). This will be levied on property owners rather than occupiers and will be collected by local authorities through the council tax framework on top of the existing council tax. The Valuation Office will conduct a targeted valuation exercise to identify properties above £2 million and properties will be revalued every five years.  A consultation will be published in early 2026.
• Stamp Duty Land Tax (SDLT) – no changes to the SDLT rates.
• Inheritance tax (IHT) – no increase to current IHT rates. The nil-rate band will stay fixed at the current level until April 2031.
• Capital gains tax (CGT) – no increase in the CGT rates.
• Non-Resident Capital Gains Tax (NRCGT) – the definition of a UK ‘property rich’ entity has been amended to provide that for protected cell companies (PCC), rather than the PCC itself, it is an individual PCC cell that is to be looked at for the purposes of the ‘property richness’.
• Enhancing tax transparency on real estate – the UK government intends to participate in a new international agreement tackling tax evasion by providing for the automatic exchange of readily available information on real estate from 2029/2030.
• Annual Tax on Enveloped Dwellings (ATED) – this remains unchanged save that the time limit for certain claims for relief from ATED has been extended to match the time limit to amend an ATED return.

While the changes are impactful as the Government must find ways to reduce the fiscal deficit against sustained high borrowing costs and weaker economic growth and productivity, the Autumn Budget does bring much-needed certainty. Something that the UK residential property market needs after a challenging few years. This, coupled with the expectation that the Bank of England will reduce the base rate in the coming months, should hopefully result in increased market activity.

If you have any queries, please reach out to your usual contact in our International Residential Property Team.