Following months of speculation, the Autumn Budget was announced last week (slightly ahead of time, thanks to the OBR). From a real estate perspective, the Budget was a mixed bag of measures. Compared to some of the rumours circulating beforehand, the measures are not as bad as some had feared. From a fiscal perspective, there was very little to inspire companies to invest and grow. However, there was good news and clear investment being made in the planning process, particularly in creating more skills and capacity within the system.
Below, we have outlined the key real estate-related announcements from the Autumn Budget. For a more comprehensive summary, please refer to our Budget analysis:
Budget 2025 Companies | Budget 2025 Individuals | Budget 2025 VAT, Customs and International Trade
Mansion tax – High Value Council Tax Surcharge
The Chancellor announced the introduction of the High Value Council Tax Surcharge for residential properties worth £2 million or more in England from April 2028. Another new tax for Property.
Homeowners are liable to pay the surcharge, and the government anticipates this will impact fewer than 1% of properties in the UK based on their April 2026 valuation.
Properties will be placed into four price bands and charged as follows:
| Threshold (£) | Annual rate (£) |
| 2 million - 2.5 million | 2,500 |
| 2.5 million - 3.5 million | 3,500 |
| 3.5 million - 5 million | 5,000 |
| 5 million + | 7,500 |
Property revaluations will take place every five years, with the rates initially being based on April 2026 values. Subsequent valuations will take place every five years.
A consultation has been announced and will take place in early 2026. The government will consult on:
- details of reliefs and exemptions
- deferral and support mechanisms
- appeal mechanisms
- treatment for those required to live in a property as a condition of their job (tied property).
Most real estate experts anticipate price bunching just below each threshold, along with reduced receipts under Stamp Duty Land Tax (SDLT) and Capital Gains Tax.
Property owners in the UK now must contend with an additional tax to add to the list of existing taxes applicable to residential property in the UK.
Increases to Income Tax rates on property income
From April 2027, the government will create separate tax rates for property income. The rates applicable will be as follows:
- property basic rate tax: 22%
- property higher rate: 42%
- property additional rate: 47%.
It will be interesting to see if buy-to-let landlords consider incorporation, given this added pressure along with the implementation of Making Tax Digital (MTD) requirements for landlords.
With the Renters Rights Act being brought in from April 2026, it is becoming harder for a buy-to-let landlord to make a profit. This rate change will also need to be reflected in the distributions made by REITs to their shareholders and withholding taxes under the Non-resident Landlords scheme.
Business rates retail, hospitality and leisure multipliers
As of April 2026, the government will introduce two permanently lower business rates multipliers for eligible retail, hospitality and leisure (RHL) properties (those with a rate-able value below £500,000).
The small business RHL multiplier will be 38.2p in 2026/27, and the standard RHL multiplier will be 43p in 2026/27.
These are the lowest rates available in decades and were introduced in the hope of supporting high-street recovery in the UK.
To cover the shortfall, a business rate surtax will apply to properties with a rate-able value over £500,000.
Consultation on land for social housing
The government has announced a consultation on reforming VAT rules to incentivise the development of land intended for social housing. Pressure has been mounting for several years to change the definition of when land can be sold zero-rated by a developer to a housing association.
Currently, HMRC insist that a building needs to be beyond ‘golden brick’ – normally the point when walls start being constructed above the foundations.
Allowing land to be sold before work has started without a VAT cost or at least changing the definition of golden brick to one that takes account of modern methods of construction, would be welcome by housing associations and commercial developers alike.
Inheritance Tax
Agricultural land within entities
UK agricultural property held by non-UK entities (such as overseas companies) will be treated as UK situs for inheritance tax purposes. The legislation will therefore operate on a similar basis to the current regime for inheritance tax on residential property. This change will apply from 6 April 2026.
This will therefore bring more UK land within the scope of UK inheritance tax for long-term non-UK tax residents.
Transfer of unused allowance
Unfortunately, the Chancellor ignored calls to reverse the forthcoming combined allowance for APR and BPR, which sees a 100% rate capped at £1 million for qualifying assets.
She further extended the application of this combined allowance until 2031, along with freezing the £325,000 nil rate band until 2031.
The Chancellor announced that any unused £1 million allowance for agricultural and business property relief will be transferable between spouses and civil partners. This includes situations where the first death was before 6 April 2026, with the legislation taking effect from 6 April 2026.
Although this is a small olive branch offered to those affected by the combined, it does at least demonstrate some understanding from the government of the impact of this upcoming change on those involved.
Additional matters and considerations
Capital Allowances: The main pool writing down allowance has been reduced from 18% to 14%. Full expensing is also retained for corporate taxpayers. There is also a new First Year allowance at 40% on qualifying spend from January 2026, which will be available to additional taxpayers such as unincorporated businesses and partnerships. Care will need to be taken on which pool assets are added to, as this will impact any allowances/charges on disposal.
Increased Corporation Tax late filing penalties: Late filing penalties are to double for late filing of corporation tax returns from 1 April 2026. A point of consideration for large property groups.
Annual Tax on Enveloped Dwellings (ATED): HMRC have relaxed the legislation to allow relief to be claimed from ATED even when the return is submitted late.
Planning capacity and capability: The government will provide the Ministry for Housing, Communities and Local Government, the Department for Science, Innovation and Technology and Defra £48 million over the next three years to boost capacity and capability in the planning system. This includes additional investment to recruit 350 planners.
Construction Industry Scheme (CIS): The government will give HMRC more powers to tackle fraud within the CIS regime, including immediate gross payment status cancellation, and announced regulations for technical consultation aimed at simplifying the administration of the regime.
Enhancing tax transparency on real estate: The UK will participate in an international agreement to share readily available information on real estate from 2029 or 2030 to tackle evasion.
For further information on any of the above, please contact us or your usual contact partner.
