Tax changes prompt landlord rethink
Summary
A new IMLA report says higher taxes on rental income from the 2027/28 tax year are likely to prompt many landlords to reassess whether to hold properties personally, via limited companies, or to exit some investments. The report argues that the impact will vary by borrowing levels, rental yields, expected capital growth and the tax costs of restructuring or selling.
Why it matters
Changes to landlord taxation can influence portfolio strategy, ownership structures and transaction activity in the private rented sector. Surveyors advising investors, landlords or lenders may see knock-on effects in demand, pricing, and the viability of buy-to-let holdings.
Key points
- IMLA says the Budget adds a further two percentage points to tax on rental income from 2027/28.
- Personal ownership rates on rental income rise to 24%, 44% and 49% for basic, higher and additional rate taxpayers.
- Mortgage interest relief restrictions can push the effective tax rate on rental profits much higher for leveraged landlords.
- The report expects the change to accelerate use of limited company structures for new purchases.
- Existing landlords may face stamp duty and Capital Gains Tax costs if they restructure holdings.
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