This year’s Budget has delivered several important announcements that will directly impact the property sector. While many of the proposals had been widely anticipated, the Chancellor, Rachel Reeves, has now confirmed two major changes that homeowners, landlords, and property investors should be aware of:

• A new annual levy for properties valued over £2 million

• Higher tax rates on property income from April 2027

Below, we break down what these changes mean and how they may affect your financial planning.

New Council Tax Premium (‘Mansion Tax’) – Effective April 2028

From April 2028, residential properties in England valued at £2 million or more will be subject to an additional yearly charge, assessed using the 2026 Valuation Office Agency (VOA) valuations.

Key details include:

• This charge is separate from standard council tax

• It will be collected by central government rather than local authorities

• The rate depends on your property’s value

Typical annual charges:

• £2,500 for homes valued between £2m and £2.5m

• Up to £7,500 for homes valued above £5m

Fewer than 1 percent of homes across England are expected to be affected, with the majority based in high-value regions such as London.

In short: if your property is valued at £2 million or more, expect an extra annual charge of approximately £2,500 to £7,500 from April 2028.

New Tax Rates for Property Income – Effective April 2027

From April 2027, income generated from property (such as rent from land or buildings) will no longer fall within standard employment tax brackets. Instead, it will be taxed under its own separate rate system.

The new rates will be:

• Basic rate: 22 percent

• Higher rate: 42 percent

• Additional rate: 47 percent

This means landlords will see an increase in the tax payable on rental profits, which will reduce take-home income and may impact long-term investment returns.

Example: £30,000 taxable rental profit

Impact: An additional £600 in tax.

What This Means for Landlords and Property Investors

These reforms represent a meaningful shift in how the Government plans to tax wealth and income from property. While high-value homeowners will face new annual costs, buy-to-let investors are likely to feel the most immediate financial impact due to the increased tax burden on rental income.

Those with significant property portfolios, or individuals considering future investments, may want to review their financial strategy well ahead of the new rules coming into force.

Need Advice? We’re Here to Help

If you’d like to discuss how these changes might affect your current properties or future investment plans, please don’t hesitate to get in touch. Our team is here to help you navigate the shifting landscape with clarity and confidence.