The Autumn Budget 2025 introduced several structural tax changes that directly affect landlords, whether properties are held personally, through self-employment, or via a limited company (SPV).
The most notable measure is the 2 percentage point increase to property income tax from April 2027. Combined with unchanged Section 24 mortgage-interest restrictions, the Budget further squeezes the profitability of personally-held rental properties.
To help landlords understand the real-world impact, we’ve modelled three scenarios — from a one-property landlord to a professional 10-property portfolio — and compared outcomes under personal ownership and limited-company structures.
Key Budget Changes Affecting Landlords
1. Property income tax increases by 2 percentage points
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Basic rate: 20% → 22%
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Higher rate: 40% → 42%
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Additional rate: 45% → 47%
2. Section 24 remains unchanged
Mortgage interest cannot be deducted for individual landlords.
Instead, a 20% tax credit applies — regardless of tax band.
3. Dividend tax increases (except additional rate)
Affects landlords extracting profits from a company:
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Basic-rate dividends: 8.75% → 10.75%
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Higher-rate dividends: 33.75% → 35.75%
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Additional-rate unchanged at 39.35%
4. Corporation tax stays at 25%
Important for SPVs — mortgage interest remains fully deductible.
Scenario Analysis: What the Autumn Budget Means for Landlords
Below are three practical examples showing exactly how the changes impact landlords in cash terms.
Scenario 1 — Single-Property Landlord (Basic-Rate Taxpayer)
Property: 2-bed flat
Rent: £18,000 per year
Costs (non-finance): £2,000
Mortgage interest: £9,000
Cash profit: £7,000
1️⃣ Personal Ownership (Section 24 Applies)
Taxable profit ignores mortgage interest
£18,000 – £2,000 = £16,000 taxable profit
Before vs After Budget
| Before Budget | After Budget | |
|---|---|---|
| Tax rate | 20% | 22% |
| Income tax on taxable profit | £3,200 | £3,520 |
| Less: 20% interest tax credit (£9,000 × 20%) | (£1,800) | (£1,800) |
| Total tax due | £1,400 | £1,720 |
| Net cash to landlord | £5,600 | £5,280 |
✔ Impact:
Net income drops by £320 per year.
2️⃣ Limited Company (SPV)
| Before Budget | After Budget | |
|---|---|---|
| Profit after corporation tax | £5,250 | £5,250 |
| Dividend tax | £459 | £564 |
| Net to landlord | £4,791 | £4,686 |
✔ Impact:
Reduction of £105 due to dividend tax rise.
Conclusion:
For one-property landlords, personal ownership remains marginally better unless profits are retained for reinvestment inside the company. gov.uk
Scenario 2 — Three-Property Portfolio (Higher-Rate Taxpayer)
Rent: £54,000
Costs (non-finance): £6,000
Mortgage interest: £27,000
Cash profit: £21,000
1️⃣ Personal Ownership (Section 24 Applies)
Taxable profit
£54,000 – £6,000 = £48,000 taxable profit
Before vs After Budget
| Before Budget | After Budget | |
|---|---|---|
| Tax rate | 40% | 42% |
| Tax on taxable profit | £19,200 | £20,160 |
| Less: 20% interest credit (£27,000 × 20%) | (£5,400) | (£5,400) |
| Total tax due | £13,800 | £14,760 |
| Net cash to landlord | £7,200 | £6,240 |
✔ Impact:
Net income falls by £960 per year, a 13.3% increase in the tax bill.
2️⃣ Limited Company (SPV)
| Before Budget | After Budget | |
|---|---|---|
| Profit after corporation tax | £15,750 | £15,750 |
| Dividend tax | £5,311 | £5,633 |
| Net to landlord | £10,439 | £10,117 |
✔ Impact:
Net income reduces by £322 after the higher-rate dividend tax rise.
Conclusion:
A limited company delivers ~£3,900 more than personal ownership per year in this scenario.
For 3+ properties, SPV structures are significantly more tax-efficient. gov.uk
Scenario 3 — Professional Landlord (10 Properties / Additional-Rate Taxpayer)
Rent: £180,000
Costs (non-finance): £20,000
Mortgage interest: £90,000
Cash profit: £70,000
1️⃣ Personal Ownership (Section 24 Applies)
Taxable profit
£180,000 – £20,000 = £160,000 taxable profit
Before vs After Budget
| Before Budget | After Budget | |
|---|---|---|
| Tax rate | 45% | 47% |
| Tax on taxable profit | £72,000 | £75,200 |
| Less: 20% interest credit (£90,000 × 20%) | (£18,000) | (£18,000) |
| Total tax payable | £54,000 | £57,200 |
| Net cash to landlord | £16,000 | £12,800 |
✔ Impact:
A reduction of £3,200 per year.
The landlord now retains just 18% of their cash profit.
Section 24 makes personal ownership of large portfolios highly inefficient.
2️⃣ Limited Company (SPV)
| Before Budget | After Budget | |
|---|---|---|
| Profit after corporation tax | £52,500 | £52,500 |
| Dividend tax (unchanged at additional rate) | £20,669 | £20,669 |
| Net to landlord | £31,831 | £31,831 |
✔ Impact:
No significant change — additional-rate dividend tax stays the same.
Conclusion:
For professional landlords with 10+ properties, limited-company ownership is overwhelmingly more tax-efficient.
Summary: Who Is Worse Off After the Autumn Budget?
| Scenario | Personal Ownership | Limited Company |
|---|---|---|
| 1 property | −£320 | −£105 |
| 3 properties | −£960 | −£322 |
| 10 properties | −£3,200 | £0 |
Key Message:
The Autumn Budget widens the gap between personal and corporate ownership structures — particularly for landlords with mortgages.
What Landlords Should Do Now
1. Review your ownership structure
SPVs continue to outperform personal ownership for 2+ properties.
2. Reassess cashflow and yields
Higher property-income tax reduces net returns from April 2027.
3. Consider incorporation planning
Especially if:
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you own multiple mortgaged properties
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you expect long-term portfolio growth
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rental returns are already thin
4. Model your portfolio under the new rules
Small changes in tax can materially alter profit and viability.
5. Seek tailored advice
Each landlord’s situation is unique — mortgages, leverage, income mix, and long-term plans matter.
https://www.plan-a.co.uk/services/property-structure-review/
Final Thoughts
The Autumn Budget 2025 creates a tougher landscape for individual landlords, particularly those with multiple mortgaged properties. With property income taxed more heavily and Section 24 left untouched, many landlords will see a noticeable drop in net returns.
By contrast, limited companies remain structurally advantageous, offering full mortgage-interest relief and consistent corporation tax rates. For many, SPVs will become the default route for future property investment.
Get in Touch
If you’d like personalised modelling or want to explore whether moving to a limited company makes sense for your portfolio, Plan A Financials Limited can provide a detailed tax-efficient comparison tailored to your circumstances.
📞 Call us: 01277 236 246
✉️ Email: info@plan-a.co.uk
🌐 Website: www.plan-a.co.uk