Should I sell my buy-to-let? What to do with the money after the 2026 Budget

Another Budget, another kicking for landlords. From April 2027, tax on rental profits rises by another 2 points to 24%, 44% or 49%, a 4-point jump across two Budgets, and tax on savings income rises to match. Thinking of selling up? Here's what to watch out for on the way out, and where the money could go next.

The Chancellor announced at the Budget on 28th October another 2 percentage points to the tax on property income from April 2027. That's on top of the 2 points already announced last year. So from next April, landlords will pay 24%, 44% or 49% on rental profits, depending on whether they're basic-, higher- or additional-rate taxpayers. (Scotland sets its own rates and will announce any changes on 3 December.)

The Office for Budget Responsibility expects the obvious: lower returns for landlords, fewer people getting into buy-to-let, and more people getting out.

If you're one of them, you're in good company. But selling is only half the job. The bigger question is what you do with the money afterwards.

Is buy-to-let still worth it in 2026?

It's not looking good. Almost 850,000 homes have left the private rented sector in the past ten years, roughly one in six rental properties. [1] In the third quarter of 2026, around 562 ex-rental homes were sold or put up for sale every day, the fastest rate since 2016. [2]

Landlords are selling far more than they're buying. In a Property118 survey of 1,654 landlords, 37.1% said their portfolio had shrunk through sales over the past two years, while just 6.5% had grown theirs by buying. [3]

David Little, a financial planning partner at wealth manager Evelyn Partners, says it isn't just tax. Higher mortgage and running costs, more red tape (including the Renters' Rights Act) and flat or falling prices in some areas, especially for flats, have all chipped away at the appeal. Meanwhile, stock market returns have looked rather tempting by comparison, without the 2am boiler calls.

How much do landlords really earn after tax?

David says one of the biggest mistakes landlords make is looking at the rent rather than what actually lands in their bank account. Here's his example: a mortgage-free £300,000 property let for £18,000 a year, owned by a higher-rate taxpayer in England.

And that's without a mortgage. If you borrow, you can't fully deduct the interest, so it gets worse. Add in empty months between tenants and the odd surprise repair bill, and the numbers look thinner still.

Property can grow in value too, so rent isn't the whole story. But prices can fall as well, and many flats have lost value in real terms for years.

How much tax will I pay when I sell a buy-to-let property?

Selling a property that isn't your home usually means Capital Gains Tax (CGT) on the profit. The rate is 18% or 24%, depending on your income. The tax-free allowance is a measly £3,000 a year, though costs of buying, improving and selling can be knocked off the gain. If you once lived there yourself, you may get some relief.

The catch many people miss: you must report and pay CGT within 60 days of completion. So work out what you'll actually have left after the mortgage, the estate agent, the solicitor and the tax bill before you start spending it in your head.

If your properties sit in a limited company, it's more complicated. The company pays corporation tax on the gain, then you can be taxed again when you take the money out. Get advice before you sell.

Should landlords sell up?

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What should I do with the money from selling a rental property?

Once the sale has gone through, it's a good moment to step back and look at your finances as a whole. Here are the main options, roughly in the order most people should think about them.

Should I use the money to pay off my mortgage?

If you still have a mortgage on your home, clearing it can be a sensible first move, especially if you're facing a pricier remortgage soon. Lower monthly bills are a real comfort in retirement.

Can I put the proceeds into an ISA?

ISAs keep your income and gains free of tax, and you can take money out tax-free. You can each put in £20,000 a year, so a couple can shelter £40,000. Do this every tax year.

Can I pay property sale money into my pension?

Pension contributions get tax reliefTax relief is money the Government adds to your pension to make up for the Income Tax you've already paid on it. For a SIPP, everyone gets tax relief at 20% (the basic rate), which boosts the value of your pension automatically., and you may be able to use unused allowances from the past three years. But you need enough earnings from work to qualify, and rental income doesn't count.

Are gilts more tax-efficient than a savings account?

Gilts are loans to the UK government. Some older ones pay very little interest and trade below the £100 you get back when they mature. The interest is taxable, but the gain is free of CGT. So if most of your return comes from that gain, they can beat a savings account after tax, particularly for higher and additional-rate taxpayers. That matters more from April, when tax on savings income also goes up by 2 points.

Consider picking gilts that mature when you need the money. Some people build a “gilt ladder" with bonds maturing at different dates to give a steady stream of cash.

Can an offshore bond replace my rental income?

If your ISA and pension are already full, an offshore bond might be worth a look. It's an investment wrapper, usually based in the Isle of Man or Ireland, that holds a mix of investments. Returns build up inside it without tax each year.

The handy bit for ex-landlords: you can take out up to 5% of what you put in each year for up to 20 years without an immediate tax bill. Put in £250,000 and you could take £12,500 a year, about £1,042 a month. Unused allowance rolls over, so skip three years and you could take 15% in year three.

But it's tax-deferred, not tax-free. When you cash it in, gains are taxed as income at the new savings rates of 24%, 44% or 49%. The appeal is choosing when you pay tax, say after you've stopped work and your tax rate has dropped. Charges can be higher than simpler options, so this is one for an adviser.

How does selling a buy-to-let affect Inheritance Tax?

Rental properties count towards your estate for Inheritance Tax (IHT), and a buy-to-let business won't usually qualify for Business Relief, even inside a company. Selling doesn't cut your IHT bill on its own, but cash is much easier to give away than a share of a flat.

Gifts to people generally fall outside your estate if you live seven more years. Regular gifts from spare income can be exempt straight away if you meet the rules. Trusts are another option, but they come with their own tax charges and paperwork.

The bottom line

Buy-to-let made a lot of people a lot of money, but the sums have changed. Selling up isn't right for everyone, but if you do, the real win comes from what happens next. Get the tax bill sorted, use your ISA and pension allowances, and think carefully before you leave a big lump sitting in a taxable savings account. For larger sums, or if inheritance tax is on your mind, it's worth paying for proper advice. Swapping bricks and mortar for a simpler, more flexible pot of money could be the best property decision you ever make.

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[1] The Landlord Association

[2] TwentyCi

[3] Landlord Zone