Budget special: a ‘light touch’ when it comes to property

It was somehow fitting that, on the morning of 26th November 2025 when most of the UK woke up to sub-zero temperatures – this year’s Budget headline was a strategic freeze. We’ll gloss over the Office for Budget Responsibility’s mishap that left the Chancellor reeling just minutes before her delivery, choosing to concentrate on what matters to you, the general public.

Firstly, property. There was an almost audible sigh of relief amongst professionals, who expected the worst. A ‘light touch’ was applied to the market, with changes mostly confined to ‘the few’ rather than ‘the masses’.

Making room for a mansion tax

The Chancellor wants to raise more money by taxing the owners of England’s most valuable homes, via a re-evaluation of council tax bands F, G and H. Those properties valued at more than £2 million will pay a new annual ‘mansion’ tax – a recurring annual sum of between £2,500 and £7,500. 

This new mansion tax will come into effect in 2028 and will be paid for by the property owner and not any tenant. Described as a London and South East-centric tax, it is estimated only 10% of homes outside of these areas will be impacted. The Government did, however, reject the opportunity to carry out a mass re-evaluation of all council tax bands. These were last evaluated in 1991.

Increase to property income tax

While you will not pay more income tax on your salary, you will pay more if you are a landlord. The rate of property, dividend and savings income tax will rise by 2% from April 2027. The basic rate will increase to 22%, with the higher rate climbing to 42% and the additional rate lifting to 47%. As there was no increase to corporation tax, we expect the Budget announcement to nudge more landlords towards purchasing and holding buy-to-lets in limited companies. 

Many aspects remain unchained

The Chancellor decided against tinkering with stamp duty. It wasn’t scrapped in favour of a seller’s tax, as rumoured, nor were the thresholds lowered so cheaper properties fell into higher tax bands. Surprisingly, Ms Reeves didn’t reduce the additional property stamp duty threshold, meaning the levy on buy-to-let purchases stays the same.

Some experts, however, are calling the Autumn Budget a missed opportunity to stimulate the housing market. There were no new initiatives to help first-time buyers, nor was there a financial reprieve for private landlords.

Frozen in time

Now to the big freeze: income tax thresholds. The Chancellor opted for a stealth tax – choosing not to forcibly lower the thresholds so more people pay tax on their income but, instead, to let people naturally drift into higher tax brackets through above-inflation pay rises and additional earnings. The freeze will extend to April 2031, with the potential to reduce the take-home pay for millions. 

ISA allowances: the same but different

The Government wants us to make riskier investments to benefit the economy and is doing so by changing the ISA rules. Popular with first-time buyers saving for a deposit, tax-free ISAs are an important part of prudent saving but if you’re under 65 years old, prepare for change.

From April 2027, you’ll only be able to save £12,000 in a cash ISA. The rest of your tax-free allowance will need to be invested in a stocks and shares ISA. The boldest savers will continue to enjoy the maximum £20,000 tax-free benefit if they choose to exclusively invest in a stocks and shares ISA.

How about the LISA - the lifetime ISA aimed predominantly at first-time buyers saving for a deposit? While there is no immediate change, the Chancellor used the Budget to confirm there would be a consultation on the product in 2026. It is widely believed LISAs will be scrapped and replaced with a newer, simpler savings vehicle, or modified so it’s fit-for purpose.

If you have any questions about the Autumn Budget and how it affects your property interests, please get in touch for advice and clarifications.