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As advisers, we’re spending more time than ever helping clients navigate a system that increasingly treats property income as a target for revenue rather than an incentive for investment. Several tax‑driven issues have been leading conversations with landlords this past year.

SDLT – Higher upfront costs and fewer reliefs

Stamp Duty Land Tax remains one of the most significant barriers to portfolio growth. The 3% additional homes surcharge continues to apply to almost all buy‑to‑let acquisitions, and the abolition of Multiple Dwellings Relief (MDR) in 2024 removed a valuable planning tool for investors purchasing blocks or multiple units.

Frozen thresholds are pushing more transactions into higher bands and increasing scrutiny around mixed‑use claims and annexes combined with divergence across the UK, where LBTT (Scotland) and LTT (Wales) apply their own surcharges means SDLT is now a strategic consideration rather than a transactional one. We’re seeing more clients exploring corporate structures, mixed‑use opportunities, or portfolio rationalisation to manage the tax burden.

Income Tax and the long shadow of section 24

Introduced by Mr Osborne in his Summer Budget 2015 under Section 24 of the Finance (No. 2) Act 2015, the restriction of mortgage interest relief continues to reshape the economics of property ownership, with individual landlords unable to deduct the full extent of finance costs from rental profits, receiving only a basic‑rate tax credit instead. For higher‑rate taxpayers, this can significantly inflate the effective tax rate on rental income.  Alongside this, landlords will face a further squeeze from April 2027, when property taxes are set to rise by 2% under the latest income tax changes. While modest in isolation, this increase compounds the financial strain and has led to increased enquiries surrounding incorporation, consideration of debt reduction strategies and a shift toward lower-yield, lower-maintenance assets.  Some investors have decided to exit the sector entirely.

Corporation Tax and the rise of the property company

Incorporation has become a common planning conversation, but it’s not a silver bullet. While companies can fully deduct mortgage interest and offer the added benefit of limited liability protection, the corporation tax landscape has become more nuanced. There must be a commercial justification for incorporating and landlords should keep in mind that whilst the headline corporation tax rate is 25% for companies with profits above £250,000, many smaller property companies fall within the marginal relief band, giving them an effective rate somewhere between 19% and 25%. Landlords will need to consider the potential CGT and SDLT due upfront arising on the transfer of property to a company as well as the potential double taxation when extracting profits.  There is also ATED exposure for high‑value residential properties worth over £500,000.

For some investors, the numbers still stack up; for others, the administrative and extraction costs outweigh the benefits.

Capital Gains Tax: Lower allowances, higher impact

Capital Gains Tax has become a more significant factor in portfolio decisions due to the reduction of the annual exemption to £3,000 per individual, although the reduction in the main rate from 28% to 24% (and 18% rate remaining for basic-rate taxpayers) has softened the tax burden somewhat.

We’re seeing more landlords planning disposals over multiple tax years, using spousal transfers, or considering hold‑and‑refinance strategies to manage exposure.

Inheritance Tax and long‑term planning

With property values rising faster than thresholds, more landlords are being drawn into the IHT net. Key considerations are whether to hold property personally or via a company and whether the use of a Family Investment Company is appropriate.  Thought should be given towards navigating gifting strategies, avoiding reservation‑of‑benefit traps, and considering whether Business Property Relief can apply—although in practice it is rarely available. In short, IHT planning is becoming a core part of landlord tax strategy rather than an afterthought.

Compliance, Record‑Keeping, and the direction of travel

With the Renters (Reform) Bill now enacted and phase 1 provisions due to take effect on 1 May 2026, the policy direction is clear: more transparency, more compliance, and more scrutiny. A future Property Portal or landlord database remains likely, and tax compliance will inevitably be part of that ecosystem. Landlords can expect greater data‑sharing between HMRC and local authorities leading potentially to more targeted enquiries into property income and an increased focus on undeclared rents and overseas landlords. The introduction of Making Tax Digital for Income Tax from April 2026 adds another layer of administrative responsibility, requiring quarterly digital updates and placing a premium on accurate, real‑time record‑keeping.

Good records and proactive planning are becoming non‑negotiable.

Closing thoughts…

The tax landscape for UK landlords in 2026 will be defined by complexity, rising costs, and fewer reliefs. SDLT remains a major barrier to investment, Section 24 continues to distort profitability which combined with the 2% rate hike and frozen thresholds, the tax take will increase year after year.

But with the right structure, planning, and advice, landlords can still build sustainable, tax‑efficient portfolios.

The key is staying ahead of the curve rather than reacting to it.

Age UK Norwich is currently seeking new Trustees and a Chair of Trustees to join our Board and help guide the organisation as we continue supporting older people across Norwich and Norfolk.

These are important leadership roles within our city and the wider region, helping to champion the needs of older people and shape the future of our charity.

About the Board of Trustees

The Board of Trustees is the governing body of the charity. It is responsible for setting the strategic direction of the organisation, ensuring good governance, maintaining financial sustainability, and supporting the leadership team to deliver services that improve the lives of older people.

Trustees play a vital role in helping the charity make effective decisions and ensuring that it remains focused on its mission. They bring a range of professional skills, perspectives, and experience to help guide the organisation and act as ambassadors for Age UK Norwich in the wider community.

The Chair of Trustees leads the Board, helping to ensure it operates effectively and strategically. The Chair works closely with the Chief Executive and fellow trustees to support good governance, lead board discussions, and represent the organisation externally.

Our Work and Impact

Like many voluntary sector organisations, Age UK Norwich faces rising demand for services and increasing financial pressures. Despite these challenges, we remain strongly committed to demonstrating the impact of our work, as highlighted in our latest impact report.

Much of our work focuses on helping older people stay independent for as long as possible, while supporting them to make meaningful choices in their daily lives.

This is made possible thanks to our small but highly effective leadership team, alongside our skilled and dedicated staff and volunteers who deliver vital services across the community.

Although Age UK Norwich is an independent charity, we are proud to be a network partner of Age UK. We have built strong partnerships across statutory and voluntary sectors and developed a well-respected reputation for advocacy, research, and effective service delivery.

Looking Ahead

Over the coming months and years, we expect significant changes across local government, health, and social care. These shifts will shape our priorities and the way we work as we continue to respond to the needs of older people in our communities.

To help guide us through this next phase, we are seeking individuals who bring strategic insight, leadership skills, and a genuine passion for improving the lives of older people. We welcome applicants from a wide range of backgrounds and experiences who share our commitment to making Norwich and the surrounding areas more age friendly.

Interested in Getting Involved?

Becoming a trustee or chair is a rewarding opportunity to contribute your skills, support your local community, and help shape the future of a charity making a real difference to older people.

Alastair Roy, the retiring Chair – who has greatly enjoyed working alongside the Board of Trustees, leadership team, staff, and volunteers in helping make our city and surrounding communities more age friendly – is very happy to speak informally with anyone interested in the role of Chair.

If you would like an informal conversation, please contact him at [email protected].

Rachel Reeves opted for the do-nothing approach, and given the impact on UK business of her previous two Budgets, this feels like a win for those of us who want to see growth. 

January tax receipts were considerably higher than forecast, likely due to increased business sales and shareholder remuneration, with business owners trying to beat the upcoming rises to income tax on dividends and Capital Gains Tax under the Business Asset Disposal Relief provisions.

This gives the Chancellor greater headroom, which hopefully can avoid her having to return for more tax rises in the Autumn Budget, even if she feels the need to indulge any further government spending plans.

Or, she may need that buffer to counter the unknown headwinds resulting from conflict in the Middle East, which has already seen an impact on stock markets, energy prices and the cost of government borrowing.  Mrs Reeves talked in the Statement about ‘charting a course through uncertainty’, and that is undoubtedly truer now than when she drafted her speech.

The growth forecast for 2026 was downgraded from 1.4% to 1.1%, which was not unexpected.  We are still seeing the impact on recruitment and business profitability of the Employer National Insurance increases and minimum wage rate rises announced in spring 2025; unemployment is forecast to increase further this year.  The silver lining is that the NI rise was a one-off and business have more certainty now, so can plan ahead to absorb these costs across another trading year.

Higher growth forecasts for 2027 onwards are welcome, but as with all longer-term predictions, what actually happens depends on many unknown factors, not least any new tax measures the Chancellor may be considering for her annual Budget in the Autumn, as well, of course, as geo-political events outside the UK’s control.

Predicted increases in GDP per person are good news; it would make even more of a difference to working people if we could see some relaxation of the personal allowance and higher rate income tax threshold in the autumn. Fiscal drag is now impacting so many people that even those on the basic state pension could be pulled into tax for the first time before long.

Local businesses are resilient and growth will come with certainty and consistency from government.  However, much capital is being held back in case of more surprise policies.  The constant speculation before last year’s Budget led to businesses suppressing investment decisions; unlocking this spending requires confidence that businesses can plan ahead positively.

Mrs Reeves boasted about measures which matter to working people such as rail fares, energy bills and fuel duty, but for us all to feel richer we need private business to grow and the tax burden to reduce.

For now at least, the do-nothing approach adopted this time around is a blessing.  When it comes to the Autumn Budget, I hope lessons have been learned and we see less meddling, less leaking – and more support for local and UK businesses.

After years during which a series of geopolitical shocks – Covid, Ukraine, President Trump’s tariff threat – have taken place, investors will have been hoping 2026 would bring a period of calm and stability in the markets.  Unfortunately, once again that hope seems forlorn.

Following weeks of anticipation and build-up, the US and Israel launched air strikes against Iran at the weekend, and the situation has now escalated, with Iran reacting by targeting many of its neighbours in the Middle East.

Unsurprisingly, this action has led to volatility in the markets.  Perhaps the most significant impact has been on the price of oil, with Iran controlling key supply routes including the Strait of Hormuz, through which flows around a fifth of the global oil trade.  As a result, equity markets have seen some large negative movements, including a nearly 3% drop in the FTSE share index on Monday (although it has already bounced back slightly).

Alongside this short-term reaction, increased oil prices could lead to higher inflation, with consequences for interest rates, government borrowing and bond and equity markets.

This kind of shorty-term volatility can be uncomfortable and unsettling for investors, but it’s crucial they don’t panic: investment decisions made on a knee-jerk basis are seldom the right ones.

Historically markets tend to overreact in the short term, but also recover swiftly.  Just 12 months after the start of the pandemic, while the disease was still in full flow throughout the world, many markets had returned to pre-Covid levels.  Similarly, markets tumbled when Russian tanks rolled into Ukraine; four years later, with that war rumbling on, markets are at record levels (until this week’s shock, that is).

The message to investors as we face another wave of market volatility is to keep a level head, and bear these three things in mind:

• Investing is considered a medium to long-term approach – generally five years and beyond.  During such a timescale, day-to-day volatility is pretty much a given.

• A diverse investment solution is of paramount importance in protecting investors against that volatility.

• Selling assets because of short-term movement in the markets is something to avoid, if possible; you could limit the longer-term growth potential.

That last point is particularly important: reactive selling following a big market fall both crystalises losses and removes the opportunity to benefit from any likely rebound – both of which will damage the long-term returns on a portfolio.

The other point to make is that often this kind of situation is already largely ‘priced-in’ to the market.  Certainly fund managers have been talking about the possibility of conflict in the Middle East for many months.

This latest economic shock comes at a time when the underlying UK and global economy is beginning to emerge from a long period of uncertainty, which hopefully will increase its ability to absorb the current instability.

The situation in the Middle East could resolve fairly quickly, or it could, like the war in Ukraine, rumble on.  Investors need to keep a calm head and not take any knee-jerk decisions that they may come to regret.

Before 2015, the route to securing retirement income was pretty simple: purchasing an annuity was compulsory before the age of 75.  But ‘Pension Freedom’ allowed savers to leave their pension pots invested and ‘draw down’ income as they needed it.  Given that this change happened in the wake of the 2008/9 financial crash, which meant that rates were at rock bottom, it’s not surprising that annuities fell out of favour.

But two factors have combined to make some people review that aversion to purchasing an annuity.

The first is that rates have bounced back considerably from their post-crash lows.  In 2014, a £100,000 pension pot would secure a level annuity at the age of 65 of as little as £4,500; today, even with interest rates once again on a downward trajectory, the figure is more like £7,700.

The second factor was the Budget announcement by Chancellor Rachel Reeves that unused pension pots will be brought within the scope of inheritance tax from April 2027.  Given that joint annuities are free from IHT on the first death, they thus become particularly attractive to couples who are not married.

The result of this has been an uptick in the take-up of annuities.  In 2024 the value of annuities sold was £7.4 billion, the largest figure since pension freedom was introduced in 2015.  The increase is especially marked when it comes to higher-value annuities: sales of plans worth more than £250,000 rose by almost a third, and of those worth more than £500,000 by more than 50%.

So if you are approaching retirement, or you have already retired but have left your pension pot invested for the time being, is now the time to consider an annuity?

The answer to that question is, as is often the case, very much dependent on your individual circumstances.  There is no ‘one size fits all’ answer.  But there are some pros and cons of annuities to take into account before making the decision.

The pros first: above all, an annuity gives you certainty.  Your income is guaranteed, not subject to the potential fluctuations of the market, and is there for your lifetime (and you partner’s if you choose a joint annuity).  You can choose an escalating annuity which provides a income which rises either by a set percentage or by the rate of inflation; you can also opt for an annuity guarantee (typically five or ten years) which means that it continues to pay out should you die during that period; bear in mind that both of these options will reduce the headline annuity rate.

And, as we have seen, joint annuities are free of inheritance tax on the first death, which can be beneficial to non-married couples.

However, there are some downsides. Once you purchase a lifetime annuity, the decision is made and if your needs change, you can’t undo it. 

It also can potentially die with you, so there may not be any unused pension pot to leave to your family.  In this respect, it is very much like a traditional defined benefit pension.

Increasingly, we are seeing a ‘mix and match’ approach, where pension-holders use part of their pot to buy an annuity to guarantee their basic income needs, but leave the rest of their pot invested to allow them flexibility in the additional income they draw down. 

Some who choose to retire before the state pension age are buying fixed-term annuities to plug that income gap until they receive that state pension.

The truth is that even with strong annuity rates, the investment growth available via the drawdown option can be even larger, so for those who do not need to guarantee their income, this can still be an attractive option.

Annuities are increasingly being considered as part of the retirement income mix.  It is a complex calculation, and one which should be undertaken with the benefit of expert advice.

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