Right, let’s cut through the noise. Yesterday’s Budget from Rachel Reeves brought some significant changes for property owners, but it’s not the disaster some are making it out to be. Here’s what actually matters and what you need to do about it.

What’s Changed

Property Income Tax Goes Up (April 2027)

From April 2027, if you own properties in your personal name, you’ll pay 2% more tax on your rental income:

• Basic rate: 20% becomes 22%
• Higher rate: 40% becomes 42%
• Additional rate: 45% becomes 47%

 

What this actually means: A landlord earning £25,000 rental profit pays an extra £500 a year. Not ideal, but hardly catastrophic. And you’ve got over a year to prepare.

Important bit: This doesn’t affect limited companies. If you’ve been sitting on the fence about incorporation, this might tip the balance.

The “Mansion Tax” (April 2028)

Properties worth over £2 million will face an annual surcharge of £2,500-£7,500.

Let’s be honest – if you own a £2 million+ property, this charge is less than 0.4% of its value. And for those of us managing properties in Bristol (outside of Clifton’s prime spots), this won’t touch most portfolios.

Tourist Tax Powers

Councils and mayors can now introduce overnight visitor levies on short-term lets. Similar to what’s already happening in Wales (£1.30/night) and Scotland (5% of stay cost).

Bristol hasn’t announced anything yet, but when they do, we’ll simply adjust our pricing. Every major European city has tourist taxes – guests are used to them.

What Didn’t Happen (Thank Goodness)

• No National Insurance on rental income – this was the big fear, and it didn’t materialise
• No stamp duty changes – all that speculation for nothing
• LHA rates still frozen – disappointing but expected

 

The FHL Changes Are Still Coming (April 2025)

This isn’t news from yesterday – we’ve known since March that Furnished Holiday Let tax advantages are going. If you’re running Airbnb or holiday lets:

• Mortgage interest relief capped at basic rate
• No more capital allowances on furniture
• No Business Asset Disposal Relief
• Profits split by ownership percentage, not by agreement

If you haven’t started planning, you need to get on it now.

What You Should Actually Do

Review Your Structure

With the 2% tax differential from 2027, limited company ownership is looking more attractive. We’re running the numbers – the maths might surprise you.

Consider Your Mix

We’re seeing smart operators already diversifying:

• Professional lets to companies – stable, less hassle and currently not affected by the Renters Rights Bill
• Mid-term rentals (1-6 months) – dodge the FHL changes and tourist taxes while keeping good yields
• Quality long-term lets – boring but reliable

 

Get Your House in Order

• Make sure you’re claiming every legitimate expense
• Get your safety certificates up to date (you’ll need them anyway under the Renters’ Rights Act)
• If you’re thinking of selling, do it before April when CGT might change again

 

Your Timeline

Now to March 2027:

• Adjust to post-FHL world
• Watch what Bristol Council does about tourist taxes
• Get your systems efficient

 

April 2027:

• New tax rates kick in
• Adjust rents accordingly (because let’s face it, costs get passed on)

 

The Reality Check

Look, nobody likes paying more tax. But let’s keep some perspective:

1. You’ve got time to prepare – nothing happens tomorrow
2. The demand for quality rental property isn’t going anywhere
3. Bristol’s still growing, tourism’s still strong, people still need homes

We’ve been through Section 24, the tenant fee ban, selective licensing, and endless other changes. Professional operators adapt and thrive. The cowboys leave the market. That’s not necessarily a bad thing.

What Ask Lavinia Is Doing

We’re already adjusting our strategies for clients:

• Preparing for potential Bristol tourist taxes
• Making sure all our properties are ahead of compliance requirements

If you want to discuss what these changes mean for your specific situation, get in touch. We’ve been managing properties in Bristol since 2015, and we’ve navigated every change thrown at us. This is just another one to work through.

The property market’s not dead. It’s just evolving. And those who evolve with it will continue to do very well indeed.

Lavinia Currie Managing Director, Ask Lavinia Ltd [email protected]