How Upcoming Tax Changes Could Affect Business Owners and Landlords

Each April tends to bring a handful of tax changes.

Some are minor adjustments. Others prompt questions from business owners and landlords about whether they need to rethink how things are structured.

Over the next couple of years, two changes in particular are likely to generate discussion:

• A 2% increase in dividend tax rates from April 2026
• A 2% increase affecting landlord profits from April 2027

   

At first glance, both sound significant. But when you look more closely at the numbers, the practical impact is often more modest than people expect.

Dividend tax increasing from April 2026

Many company directors take income through a combination of salary and dividends.

This approach has been widely used because dividends are typically taxed more favourably than taking the same amount entirely as salary.

With dividend tax rates increasing by 2% from April 2026, it’s natural for directors to ask whether the traditional salary and dividend split still makes sense.

In most cases, the answer is yes.

Even with the increase, dividends will generally remain more tax-efficient than withdrawing the same amount purely as salary. National Insurance contributions still make salary more expensive once you move beyond relatively modest levels.

In my experience, the confusion here often comes from focusing on one tax change in isolation. Remuneration planning usually involves several moving parts — corporation tax, personal tax bands, National Insurance and longer-term profit planning.

Looking at the whole picture tends to lead to more balanced decisions.

Landlords facing changes from April 2027

A similar 2% increase affecting landlord profits is expected to take effect from April 2027.

While this change is still some time away, it forms part of a wider trend we’ve seen in recent years, where the taxation of property income has gradually become less favourable.

As a result, some landlords are beginning to review whether their current structure still works for them.

One option that often comes up is holding property through a limited company. For landlords who plan to reinvest profits into further property, that structure can sometimes offer advantages.

However, transferring property into a company can also trigger Capital Gains Tax and Stamp Duty Land Tax, which means it’s not always the straightforward solution it may appear to be.

I explored those considerations in more detail here:
Should I Transfer My Rental Property to a Limited Company?

What the numbers look like in practice

When we run the numbers, the increases themselves are usually manageable.

For example, a company director receiving £50,000 in dividends could see an additional tax cost of roughly £1,000 per year following a 2% increase.

A landlord generating £30,000 in rental profit might see an increase closer to £600 annually, depending on their tax band.

These figures are not insignificant. But they rarely justify making large structural changes purely because of the increase itself.

Taking a balanced approach

Tax changes can sometimes create the impression that immediate action is required.

In reality, a small increase in tax does not automatically mean the underlying structure needs to change.

What often matters more is taking the opportunity to review the wider financial picture — particularly if you run a limited company or hold multiple properties.

For landlords, my 5 Top Tax Tips for Landlords guide covers some of the areas that are commonly overlooked when reviewing property income and expenses.

Final thoughts

Tax rules will continue to evolve, and small increases are part of that landscape.

In my experience, the most effective approach is rarely to react to a single change in isolation.

Instead, it’s about understanding how those changes fit into longer-term plans — for the business, the property portfolio and the people behind them.

A thoughtful review tends to be far more valuable than a quick reaction.