Stamp Duty, CGT and NI: The Real Cost of Buy-to-Let in 2025/26

14/09/2025

Investing in buy-to-let property has never been more complex. For landlords in the 2025/26 tax year, a number of changes to Stamp Duty Land Tax (SDLT), Capital Gains Tax (CGT), and proposed National Insurance (NI) reforms are already in place. The upfront costs of acquisitions, the ongoing income tax burden, and exit tax liabilities have all shifted. Understanding these changes is vital for planning, protecting profitability, and making informed decisions.

Key Tax Changes for 2025/26

Stamp Duty Land Tax (SDLT)

Several important SDLT changes came into effect on 1 April 2025:

The nil-rate threshold for main residential properties dropped from £250,000 to £125,000. muve.me.uk+2Fees Free Mortgages+2
First-time buyer relief thresholds were reduced. The nil-rate limit for first-time buyers is now £300,000, and the relief applies only where the purchase price is £500,000 or less. Those buying for more than that no longer qualify for the first-time buyer relief. Fees Free Mortgages+2muve.me.uk+2
For additional homes or buy-to-let purchases, SDLT rates on the lower bands increased. For example, the portion of a second property between £125,001 and £250,000 is now taxed at 7% (instead of the previous 5%) under the updated scheme. Rothera Bray Solicitors+3Davis Gregory Solicitors and Notaries+3muve.me.uk+3

These changes raise entry costs significantly for landlords acquiring property, particularly in lower to mid-price bands where previously there was more generous tax-free carry.

Capital Gains Tax (CGT) & Reliefs

Landlords disposing of property now face a different tax landscape:

From 30 October 2024, the main CGT rates for many non-residential assets increased: 10% rate → 18%, and 20% rate → 24% for higher rate taxpayers. House of Commons Library+2Reuters+2
Business Asset Disposal Relief (BADR) (formerly Entrepreneurs' Relief): the reduced rate rose from 10% to 14% from 6 April 2025, with a further increase to 18% scheduled for 6 April 2026. House of Commons Library+3GOV.UK+3UK Tax Policy Map+3
Carried interest is now taxed at a flat 32% rate from 6 April 2025. House of Commons Library
The lifetime cap for Investors' Relief has been reduced to £1 million for qualifying disposals on or after 30 October 2024, mirroring BADR's cap. House of Commons Library+1

Together, these changes mean that both gains on property disposals and gains from certain business sales are more heavily taxed, and opportunities to use reliefs are narrower or more expensive.

National Insurance (NI) Proposals

As of now:

There are ongoing proposals to apply some form of NI contribution or levy to rental income or profits. However, nothing has been legislated yet. Landlords should treat this as a possibility to watch, not as a certainty.
Because legislative proposals can change, flexibility in your financial planning remains important.

The Real Cost for Landlords in 2025/26

Putting it all together, here are the major cost pressures for buy-to-let portfolios:

Upfront Acquisition Costs
SDLT thresholds have dropped, and surcharge rates for additional homes have increased in lower price bands. Many purchases will attract SDLT sooner and at higher rates than in prior years.
Reduced Income Margins
While NI on rental income is not yet law, all landlords must manage increased costs from mortgage interest rules, maintenance, insurance, compliance, and now tighter cash flows due to other tax increases.
Heavier Exit Taxation
Disposing of property now carries greater CGT risk. Reliefs like BADR still exist, but at higher rates than before. Property held for long periods may result in large taxable gains, given the lower allowances and increased rates.
Behavioural & Market Impacts
Some landlords may reduce investment activity, delay disposals, or adjust property portfolios in response to higher tax exposure. Some of these reactions can lead to reduced liquidity or slower turnover.

What Landlords Should Be Doing Now

Since many of the "future" changes are already in force, here are updated practical steps for landlords in 2025/26:

Run cash flow modelling under new SDLT rates: Even if acquisition is in the future, use current thresholds and rates in your projections to avoid surprises.
Re-examine property ownership structure: Owning properties via limited companies vs personally has different tax implications (for CGT, SDLT, income, and possibly NI if introduced). It may still be worthwhile to explore structural changes, but only with professional advice.
Plan disposals carefully: If you intend to sell, compute likely CGT liability now under current rates and reliefs. Look at timing to optimise outcomes (especially if you qualify for reliefs or can spread gains).
Capture all eligible deductions: Ensure all allowable expenses are fully recorded. Maintenance, repairs, finance costs (as permitted), and other property management costs should be maximised to reduce taxable profit.
Stay informed on NI proposals: Monitor government or HMRC announcements. Early insight into any proposed law change may give you time to adjust holding patterns, financing, or even consider exiting marginal properties before costs rise further.

How Finovate Accountancy Can Help

At Finovate Accountancy, we support landlords through:

Structuring purchases to minimise upfront costs (especially SDLT)
Detailed modelling to assess which properties remain profitable under the new tax regime
Tax planning for gains and sales, using reliefs like BADR where applicable
Helping you evaluate whether incorporation, joint ownership, or other ownership models may deliver savings

👉 Book a free consultation today to review your buy-to-let portfolio for 2025/26 and plan how to protect your returns under the current Stamp Duty, CGT, and potential NI changes.