Are there new tax reliefs or allowances for landlords to offset rising costs and maintain profitability after the Budget?
Quick Answer
Unfortunately, no significant new tax reliefs have been introduced. Landlords continue to face reduced mortgage interest relief (Section 24) and lower Capital Gains Tax allowances, making profitability more challenging.
## Navigating the Current UK Property Tax Landscape
Many landlords are keenly watching for any new tax reliefs or allowances to help offset the rising costs associated with property investment. Unfortunately, the December 2025 Budget did not introduce any new tax reliefs specifically designed for landlords. In fact, some existing allowances have been reduced or new costs introduced, meaning strategic planning is more vital than ever for maintaining profitability.
Here’s a breakdown of the key factors currently impacting landlords:
* **Section 24 on Mortgage Interest Relief:** This remains a significant hurdle. Since April 2020, individual landlords cannot deduct mortgage interest from their rental income to reduce their tax bill. Instead, they receive a basic rate tax credit (currently 20%) on their finance costs. This primarily impacts higher and additional rate taxpayers, as it means their taxable income is effectively higher, potentially pushing more of their income into higher tax brackets. For example, a landlord with £15,000 in rental income and £10,000 in mortgage interest might previously have been taxed on £5,000. Now, they are taxed on the full £15,000, receiving only a £2,000 tax credit.
* **Capital Gains Tax (CGT) Annual Exempt Amount:** The annual exempt amount for CGT on residential property has seen a notable reduction. From April 2024, it dropped from £6,000 to just £3,000. This means landlords will pay CGT on a larger portion of their gains when selling a property. A higher rate taxpayer selling a property with a £50,000 gain will now pay 24% CGT on £47,000, rather than £44,000, leading to a higher tax liability.
* **Stamp Duty Land Tax (SDLT) Additional Dwelling Surcharge:** As of April 2025, the additional dwelling surcharge for buying residential properties (that aren't your main home) increased to 5%. This is applied on top of the standard residential rates. So, if you're buying a second property for £300,000, you'll pay the standard residential rates plus an extra 5% on the entire purchase price, making acquisitions more expensive.
* **Corporation Tax for Limited Companies:** While individual landlords face Section 24, those operating through a limited company can still deduct finance costs. However, Corporation Tax rates are 19% for profits under £50,000 and 25% for profits over £250,000. This structure requires careful consideration, but it does offer a different way to manage mortgage interest for some investors.
## Challenges and Increased Costs for Landlords
Given the lack of new tax reliefs, landlords are primarily facing an environment of increasing costs and tightening regulations.
* **High Interest Rates:** The Bank of England base rate, currently 4.75% as of December 2025, translates directly into higher mortgage costs. Typical buy-to-let mortgage rates are now between 5.0-6.5% for a 2-year fixed term, significantly impacting cash flow and stress-test affordability.
* **Stricter Lending Criteria:** Buy-to-let stress tests require rental income to cover at least 125% of the mortgage interest at a higher notional rate, typically 5.5%. With rising interest rates, it's becoming harder for properties to pass these tests, limiting borrowing capacity.
* **EPC Regulations:** While currently a minimum EPC rating of E is required, proposed legislation for new tenancies to meet a C rating by 2030 (which is still under consultation) could necessitate significant investment for upgrades in many older properties.
* **Legislative Changes:** The impending abolition of Section 21 evictions under the Renters' Rights Bill (expected 2025) and Awaab's Law extending damp/mould response requirements to the private sector add further compliance burdens and potential costs for landlords.
## Investor Rule of Thumb
In the current climate, assume no new tax reliefs are coming and factor existing tax structures and rising costs into every deal calculation from the outset.
## What This Means For You
The landscape is undeniably tougher, but opportunities still exist for those who are well-informed and strategic. Don't rely on future tax breaks; instead, focus on optimizing your current portfolio and acquisition strategies under existing rules. Most landlords don't lose money because of tax, they lose money because they don't understand the full financial picture before they invest. If you want to know how to stress-test your deals against these financial headwinds, this is exactly what we analyse inside Property Legacy Education.
Steven's Take
Look, I know this isn't what people want to hear. When I started building my portfolio, Section 24 was already a reality, so I had to model for it from day one. There are no magic tax reliefs suddenly appearing. The government's stance has been pretty consistent: they want to encourage institutional landlords or push individual landlords towards company structures. For me, that meant a hard look at limited company incorporation for new purchases. It's not a silver bullet for everyone, but if you're serious about growing a portfolio, you *have* to model out the impact of Section 24 and the CGT changes. Don't bury your head in the sand; get good advice and adapt.
What You Can Do Next
Review your current tax position with an accountant who specialises in property to understand the full impact of Section 24 and CGT changes as of December 2025.
Explore the benefits and drawbacks of setting up a Limited Company for future property purchases to potentially mitigate tax liabilities.
Ensure you are claiming all allowable expenses (excluding mortgage interest for individuals) to reduce your taxable rental income.
Model different scenarios (e.g., higher interest rates, longer void periods) to stress-test the profitability of your existing portfolio and any potential new acquisitions.
Get Expert Coaching
Ready to take action on tax & accounting? Join Steven Potter's Property Freedom Framework for comprehensive, hands-on property investment coaching.