Tax and regulation changes all landlords need to know

PHS Team

22 Apr, 2025

As a UK landlord, you face a complex landscape of landlord tax changes and regulations. In 2025 and beyond, landlord tax changes are becoming more challenging. 

From digital tax reporting to new rules, it's important to stay informed. This helps you avoid penalties and keep your business profitable. Whether you're new or experienced, knowing these updates is important for navigating buy-to-let tax changes.  

This blog will explain the important changes you need to know, helping you handle challenges and opportunities. 

Making Tax Digital (MTD) for Landlords

Making Tax Digital (MTD) is a UK government initiative to update the tax system by making it more digital. For landlords, this means an important change in how they manage their taxes, particularly in light of ongoing landlord tax changes. Starting from April 2026, landlords earning over £50,000 annually will need to comply with MTD for Income Tax.

What Landlords Need to Do

• Digital Records: Start keeping digital records of income and expenses.
• Software Options: Explore HMRC-compliant software for easy reporting.
• Future Expansion: In April 2027, MTD will apply to landlords earning over £30,000.

Changes to Capital Gains Tax (CGT) Rules

Capital Gains Tax (CGT) is a tax you pay when you sell something that has increased in value, like a property or shares. The profit you make is taxed, not the total amount you receive. 

Recent landlord tax changes include:

• Annual Exemption: The CGT annual exemption has been reduced to £3,000 from April 2024. This means you can only earn up to £3,000 in gains without paying tax.
• Tax Rates: The main CGT rates have increased. For disposals made after 30 October 2024, the rates are 18% and 24% for basic and higher rate taxpayers, respectively.
• Business Asset Disposal Relief (BADR): This relief helps reduce CGT on business assets. The rate for BADR and Investors’ Relief increases to 14% from 6 April 2025 and to 18% from 6 April 2026.

Mortgage Interest Tax Relief Reform

In recent years, the UK government has made changes to how mortgage interest is treated for tax purposes. These changes affect individual landlords and have been phased in since 2017. The reform impacts how landlords can claim tax relief on their mortgage interest payments.

Current Rules

Landlords can only claim a 20% basic rate tax credit on mortgage interest. This change affects higher-rate taxpayers, reducing their tax efficiency.

Shift to Limited Companies

Many landlords are moving to limited company structures to maintain tax efficiency. This allows them to claim mortgage interest as a business expense.

EPC (Energy Performance Certificate) Requirements

An Energy Performance Certificate (EPC) is a document that evaluates the energy efficiency of a property. It rates properties from A (most efficient) to G (least efficient). Currently, rental properties in England and Wales must have at least an E rating.

Current Regulations

• Minimum E-Rating: Since 2018, all rental properties must have an EPC rating of E or above to be legally let.
• Existing Tenancies: From April 2020, this requirement applies to all existing tenancies, not just new ones.

Proposed Changes

The UK government is planning to increase the minimum EPC rating for rental properties:

• Proposed Timeline: The government aims for all rental properties to achieve a minimum EPC rating of C by 2030.
• New Tenancies: Initially, new tenancies were proposed to meet this standard from 2025, but this timeline is under review.
• All Tenancies: The goal is for all tenancies to comply by 2030, ensuring more energy-efficient homes.

Local Authority Licensing & Compliance Expansion

Local authorities in the UK are increasingly using licensing schemes to regulate the private rented sector (PRS). These schemes aim to improve property standards, increase tenant safety, and reduce anti-social behavior. 

Recent Changes and Expansions:

• Relaxed Rules: As of December 2024, local housing authorities no longer need the Secretary of State's approval to implement selective licensing schemes, making it easier for councils to introduce these programs.
• Increased Adoption: More councils are adopting selective licensing due to these relaxed rules, leading to a broader geographic reach and more properties being covered

What Landlords Should Do Now to Stay Compliant and Profitable

Here are the steps landlords should take now, presented in one-line points:

1. Start using HMRC-compliant software for digital record-keeping.
2. Consider switching to a limited company for tax efficiency.
3. Plan energy efficiency upgrades to meet future standards.
4. Ensure compliance with local schemes to avoid fines.
5. Keep up with gas safety, electrical safety, fire safety, right-to-rent checks, and deposit protection.
6. Consult with advisors for tax planning, inheritance tax, and CGT strategies.

Staying ahead of landlord tax changes is necessary for maintaining profitability and avoiding penalties. Landlords should look for professional advice and stay updated on evolving regulations to ensure they remain compliant and tax-efficient in the face of these changes.

As a landlord, staying informed about tax and regulation changes is important. PHS Associates can help you navigate these complexities. They provide services, including tax planning, compliance checks, and property management. Contact us by phone at 0208 8611685 or by email at info@phs-uk.co.uk if you need accountants. 

By choosing PHS Associates, you can focus on growing your investments while they handle the details, providing timely rent collection, regular property checks, and expert advice to increase your rental income and reduce stress.