What Investors Need to Know About Buy-to-Let Tax Changes (2026 Update)
- AV Hughes Properties
- Nov 4
- 2 min read
The UK property market continues to evolve, and so do the tax rules that affect landlords and buy-to-let investors. In 2025, several HMRC updates have reshaped how investors calculate rental income, mortgage interest relief, and capital gains.
Whether you’re a first-time landlord, a seasoned investor, or expanding your property portfolio, understanding these changes is key to protecting your profits and planning ahead.
1️⃣ Key HMRC Buy-to-Let Tax Changes in 2026
Here’s what’s new (and what still matters):
Mortgage Interest Relief – Still restricted to a basic rate (20%) tax credit.
Capital Gains Tax (CGT) – Reduction in the annual exemption threshold, meaning more gains may now be taxable when selling investment properties.
Stamp Duty Land Tax (SDLT) – No major changes this year, but the 3% surcharge for second homes remains.
Corporation Tax for Limited Companies – Investors holding property through a limited company face a tiered tax rate (19–25%), depending on profit levels.
Making Tax Digital (MTD) – Landlords earning above £50,000 must now keep digital records and report quarterly to HMRC.
2️⃣ Practical Example: How These Changes Affect You
Let’s say you earn £15,000 in rental income and pay £5,000 in mortgage interest.
Before 2020: You could deduct all your interest before calculating tax. Now: You pay tax on the full £15,000, but receive a 20% tax credit on the £5,000 interest (£1,000 off your tax bill).
➡️ Result: Higher taxable income, potentially pushing you into a higher tax bracket.
If you own multiple properties or are considering incorporating your portfolio, it’s worth running the numbers carefully or consulting a property tax specialist.
3️⃣ How Investors Can Adapt
Consider setting up a Limited Company to potentially reduce tax and ring-fence liability.
Track expenses digitally to stay compliant with MTD.
Plan for CGT when selling timing can make a big difference.
Review your rental pricing to maintain profitability after tax.
4️⃣ Why This Matters for Property Investors
Understanding these updates doesn’t just save you money it shapes how you grow your portfolio, finance future purchases, and even where you choose to invest next.
If you’re looking for trusted, fully managed investment properties or accommodation options in high-demand areas, we can help you find the right opportunities.
Conclusion
Tax changes can feel overwhelming, but staying informed helps you stay profitable. Whether you’re exploring new investments or managing existing properties, the key is to plan ahead and work with experts who understand both property and tax.
👉 Discover smart property investment strategies now! 📱+44 7845 025299
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