Autumn Budget 2026: First-Home Boost, Higher Landlord Tax

28 October 2026 is a date to note in the UK property investment calendar. Chancellor John Healey’s Autumn Budget raised the tax rates on landlords’ property income again. This is the second Budget cycle in a row to raise the rates on rental income. The IREIS Properties advisory team went through the official HM Treasury announcement line by line on the day it was published, so that the first version you read is the accurate one.

For overseas families in Taiwan and Hong Kong who own UK rental property, this Budget is not one isolated rate change. It means stress-testing your whole ownership plan again: how rental income is taxed, whether your ownership structure needs to change, when the extra burden on high-value homes begins, and whether your inheritance planning still holds. Below, we take each point in order of impact and timing.

A boost for first-time buyers: the Your First Home scheme

This Budget is not only about tax rates. For anyone buying their first home in England, the headline worth remembering is £4.7 billion for the new Your First Home equity loan scheme, which the government expects to help around 70,000 households onto the housing ladder (HM Treasury, Budget 2026).

The structure is straightforward. According to the government’s scheme guidance, eligible first-time buyers need a deposit of at least 2.5%, and the government lends 20% of the purchase price as an equity loan, interest-free for the first five years. Interest of 1.5% applies in year six and 3% from year seven. The loan is usually repaid when you sell, at 20% of the home’s value at that point, so the amount rises or falls with the market.

The scheme covers new-build homes in England bought as your main home. In London the price cap is £650,000 in inner London and £500,000 in outer London, as defined in the London Plan 2021, and total household income must be £140,000 or less (£110,000 outside London). Pre-registration opens by the end of December 2026 and does not commit you to buying; applications are expected to open in February 2027, with the first sales in April 2027.

If you are planning to buy your first home in England, this is worth preparing for now. The government says full eligibility rules, and the participating developers and lenders, will be published before applications open. Once the list is out, IREIS Properties can help you find qualifying homes among our new-build listings and introduce you to a mortgage broker who knows the scheme. Our Your First Home scheme guide covers the background.

Property income rates: the April 2027 dividing line

This is the measure that affects overseas landlords most directly. According to HM Treasury, Budget 2026, Annex A, from the 2027-28 tax year (that is, from 6 April 2027), property income will be separated from the general income tax framework and taxed at new “property rates”: 24% for basic rate taxpayers, 44% for higher rate taxpayers and 49% for additional rate taxpayers.

Rental income for the 2026-27 tax year (from now until 5 April 2027) is still taxed at the current income tax rates: 20%, 40% and 45%. This gap matters. If you are deciding whether to keep a property, or whether to make structural changes before the new rates apply, 6 April 2027 is the real cut-off.

The 2 percentage points did not come out of nowhere. According to HMRC’s policy paper, the 2025 Budget had already set the property income rates at 22%, 42% and 47%. The 2026 Budget adds 2 percentage points to those, settling at 24%, 44% and 49%. Across the two Budget cycles, property income rates have risen by 4 percentage points in just two years.

The finance cost credit works as before, but matters more

An individual landlord cannot deduct mortgage interest from rental income as an expense. It is dealt with as a tax credit instead (the current credit rate is 20%). According to Tax Policy Associates’ Budget analysis, this credit continues under the new system and is linked to the new basic property rate.

What does this mean? The credit follows the basic property rate. But for overseas landlords whose income falls in the higher or additional rate bands, the applicable rate has risen to 44% or 49%. The gap between the interest credit and the rate you pay is still absorbed by the landlord, so the effective tax burden widens further. This is the part of an ownership review that most needs a fresh look. We suggest your tax adviser confirms the impact for your circumstances.

The Non-Resident Landlord Scheme: withholding is not your final tax

If you live overseas, one point is worth making clear. Under the UK’s Non-Resident Landlord Scheme (NRLS), if you have not applied to HMRC for approval to receive rent gross (form NRL1), the letting manager or tenant must withhold 20% from each rental payment and pay it to HMRC. That 20% is a payment on account, not a separate tax. Your final tax is settled in your annual Self Assessment return, at the property rate that applies at the time. From the 2027-28 tax year, that rate will be 24%, 44% or 49%.

If you have not yet completed NRLS registration or appointed a licensed letting manager, this is a practical task to deal with before April 2027. IREIS Properties can introduce you to a licensed letting manager and make sure the NRLS compliance process is arranged before you arrive in the UK.

High value council tax surcharge: the £2m threshold and the 2028 timetable

Another measure that directly concerns owners of high-end property is the High Value Council Tax Surcharge (HVCTS). According to the official UK government announcement, the surcharge applies to owners of homes in England valued at £2m or more. It is expected to take effect from April 2028, is paid by the owner rather than the occupier, and is separate from existing council tax.

The surcharge has four bands. Homes valued at £2m to £2.5m pay £2,500. Those between £2.5m and £3.5m pay £3,500. Those between £3.5m and £5m pay £5,000. Those above £5m pay £7,500. From 2029-30 the amounts rise with the Consumer Prices Index (CPI). The bands are summarised in the government announcement details from law firm Charles Russell Speechlys.

Which properties are really affected?

Valuations are based on 2026 and will be reassessed every five years. The Budget confirms there will be a deferral scheme, certain exemptions and discounts, and a 100% premium on homes left empty and unfurnished for 12 months or more. Full details are still to be published by the government, so we suggest your solicitor confirms them. The consultation also discussed a separate “non-resident surcharge” for overseas owners. The Budget did not confirm this. It remains a possible future change and is not settled policy.

Note the cliff-edge effect of the £2m threshold. A property valued just below it is not caught by the surcharge. Once above it, the property falls into the first band. If you own a London home valued near the threshold, whether the 2026 valuation baseline needs a professional check is something to discuss with your tax adviser.

Overall, fewer than 1% of homes in England are expected to be affected. But for owners of high-end property in prime London, this is a new annual cost from April 2028 and should go into your long-term financial model.

Capital gains tax and the overall cost of ownership

The Budget makes no change to the rates of Capital Gains Tax (CGT) on residential property. According to HM Treasury Annex A, the residential property CGT rates for 2026-27 and 2027-28 stay at 18% for basic rate taxpayers and 24% for higher rate taxpayers. The annual exempt amount is £3,000. Rates are subject to change; consult a qualified UK tax adviser.

On the surface, no change to CGT looks like neutral news. But the two taxes need to be assessed together. Net rental returns during ownership shrink because of the higher property rates. If your holding period stays the same, the tax on sale (CGT) and the after-tax income built up during ownership together make up the real return on a property investment. Higher property income rates mean less net cash flow builds up each year before you sell. For a strategy built mainly on long-term rental income, this matters more fundamentally than the CGT rate alone.

For more background on tax and ownership structures, see the 2026 guide to buying to let in London: rental yields and tax structure and what overseas buyers need to know about buying UK property.

Reviewing a company ownership structure

The tax comparison between personal and company ownership needs to be recalculated under the new property rates. If a company owns an English residential property valued above £500,001, it must also pay ATED (Annual Tax on Enveloped Dwellings). According to HM Treasury Annex A, the annual ATED charges for 2027-28 are: £4,750 for properties between £500,001 and £1m; £9,750 for properties between £1m and £2m; and £33,300 for properties between £2m and £5m. These charges are all higher than in 2026-27. Whether to move a property into a company must be recalculated by your accountant based on your ownership structure, borrowing arrangements and holding period. There is no one-size-fits-all answer.

Inheritance tax: the residence test and UK property

Many Taiwanese and Hong Kong families do not include inheritance tax in their early planning when buying UK property. But it cannot be avoided in long-term ownership. From 6 April 2025, whether UK inheritance tax covers a person’s non-UK assets is no longer decided by “domicile”. It depends on years of residence instead. If a person has been a UK tax resident for at least 10 of the 20 tax years before the event (a “long-term resident”), their worldwide assets fall within UK inheritance tax. The change rests on the Statutory Residence Test (SRT).

According to analysis by accountancy firm Saffery, an overseas family who live long term in Taiwan or Hong Kong and own only a UK rental property will normally not meet the long-term resident definition. Only their UK assets, including that UK property itself, fall within UK inheritance tax. Their worldwide assets do not. This Budget makes no further change to this rule.

One scenario needs particular care. If a parent later decides to move to the UK and lives there for at least 10 of the 20 tax years before the relevant event, their residence status will change, and their worldwide assets may come within UK inheritance tax. This does not happen immediately. But for families planning to relocate, early estate planning is especially important.

Where Taiwanese parents help their children buy in the UK by gifting money, the tax treatment of passing assets between generations varies from case to case. We suggest your solicitor and tax adviser confirm it. For the funding and ownership questions, start with the complete guide to buying UK property for your children.

Stamp duty, off-plan buyers and the timetable ahead

The Budget makes no change to Stamp Duty Land Tax (SDLT), and the thresholds stay the same. According to Which?, the Prime Minister said in July 2026 that this Budget would not change stamp duty. This is not a permanent promise for the whole Parliament, but it does confirm no change this time. Stamp duty is calculated differently depending on the buyer’s status (overseas buyer, first-time buyer, or already owning another home). You can estimate it for your own circumstances with the stamp duty calculator.

A timing gap off-plan buyers should watch

If you have exchanged contracts, or are considering buying, a new-build off-plan property, there is a practical timing gap that is easy to miss. It often takes some time from exchange to completion of the building. So if you exchange before the end of 2026, the property may well complete and start letting after 6 April 2027, when the new property rates already apply. When assessing rental returns, we suggest stress-testing first-year net income at 24%, 44% or 49% rather than at current rates. Figures are approximate and subject to market conditions.

Key dates and suggested actions

The confirmed dates are as follows. On 6 April 2027, the new property income rates take effect, while rental income for 2026-27 is still taxed at the current rates. In April 2028, the HVCTS takes effect for owners of English homes worth £2m or more. Before then, these steps are worth prioritising:

First, ask your accountant to recalculate the net rental income on your existing property under the new rates. Confirm whether your ownership structure (personal or company) still suits you, so you do not find after April 2027 that you should have changed it earlier. Second, if you have not completed NRLS registration, appoint a licensed letting manager and make the relevant application to HMRC. This makes sure rent withholding and annual tax filing are ready before the new rates apply. Third, if your property is valued close to £2m, confirm the 2026 valuation baseline before the surcharge starts in 2028, and learn the latest details of the deferral and exemption schemes. Fourth, if your family’s ownership structure involves a trust, the trust’s property income rates will also need to be assessed under the new system. We suggest your accountant confirms the specific rates for your type of trust.

For more on the UK tax and buying framework, see IREIS Properties’ tax and legal guides. Consult a qualified UK tax adviser for your circumstances.

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The Budget’s provisions are fixed, but every family’s ownership structure, tax status and financial goals are different. No announcement can replace a careful review of your own case. The advisers at IREIS Properties speak Mandarin, Cantonese and English. They can help you clarify the ownership arrangements for your existing property, work with your tax accountant and solicitor, and, where needed, help you review your letting management arrangements. If you are still deciding or preparing to make changes, please speak to us directly through the contact page.

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Note: Rental yield figures are market reference estimates, not guaranteed, and actual returns depend on the property and market conditions. Tax rates may change with policy, so we suggest consulting a qualified UK tax adviser.