As the UK government sharpens its focus on property wealth, landlords in 2025 must think well beyond monthly rental income. With potential reforms to Capital Gains Tax (CGT) and a growing appetite to review Inheritance Tax (IHT) reliefs, your property portfolio could face higher liabilities in the years ahead.
But with the right planning—ideally long before a sale or succession—you can protect your assets, reduce tax exposure, and pass on more to your family.
Here’s what landlords need to know this year.
Capital Gains Tax (CGT) changes and strategies in 2025
While CGT rates haven’t yet been aligned with income tax (a reform long mooted by Labour), the Chancellor has reduced the annual CGT allowance from £6,000 in 2023–24 to £3,000 in 2024–25.
That means landlords face more tax on sales—even with modest gains.
Current CGT rates:
- 18% on gains within the basic income tax band
- 28% on gains above that
Planning tips:
- Use up the £3,000 annual allowance each tax year
- Offset gains against capital losses
- Consider spreading disposals across multiple years
- Transfer property between spouses to utilise both allowances
- Explore Business Asset Disposal Relief (formerly Entrepreneurs’ Relief) if running as a property business
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Inheritance Tax and property in 2025
Property is subject to Inheritance Tax at 40% on estates above the nil-rate band, which currently sits at:
- £325,000 per person (main band)
- Up to £500,000 with the residence nil-rate band (if passing to direct descendants)
For landlords with multiple properties, it’s easy to breach the threshold—especially as property prices recover in 2025.
IHT planning strategies for landlords
Gifting property early
If you survive 7 years after gifting, the asset may be outside your estate. But this comes with CGT considerations and loss of control.
Using trusts
A discretionary trust can shelter assets from IHT while allowing flexibility. However, it comes with setup costs, ongoing admin, and potential 10-year charges.
Limited company structures
Holding property in a company can help with succession planning and allow for gradual share transfers. But shares may still attract IHT.
Limited company buy-to-let vs personal ownership – what’s best for landlords in 2025?
Life insurance in trust
A simple way to cover expected IHT and pay your estate’s bill without selling property. Premiums are usually tax-deductible and policies are outside the estate.
Charitable giving
Leaving 10% or more of your estate to charity can reduce your IHT rate from 40% to 36%.
Watch out for tapering and residence tests
- The residence nil-rate band only applies if you pass on a qualifying residence to children or grandchildren
- It tapers for estates over £2 million
- For portfolios in trusts or companies, reliefs may be harder to apply
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Example: how tax planning could save £240,000
Landlord A owns a £1.2m portfolio in their own name with no planning.
Estimated IHT liability: ~£300,000+
Landlord B holds the same portfolio in a limited company, has life insurance in trust, and gifts £200k over time.
Estimated IHT liability: ~£60,000
Planning difference: £240,000+
Plan while you still can
Landlords who act early—well before selling or passing on assets—can retain more wealth, reduce family stress, and prepare for whatever political winds blow next.
The taxman doesn’t wait. Neither should you.
