UK Tax Burden Reaches Highest Level in 70 Years! Overseas Landlord Investment Appetite Falls; Amazon Launches Drone Delivery Service in Britain
- TBA
- May 11
- 6 min read
‘Tougher tax backdrop’ drives decline in overseas landlord purchases
According to the latest research from UK real estate agency Hamptons, overseas investors are showing declining interest in the UK’s buy-to-let property market as rising stamp duty costs and a tougher tax environment continue to weigh on investment returns. International buyers are increasingly shifting away from investment purchases toward owner-occupier homes.
The data shows a significant change in the composition of overseas buyers between 2016 and 2026. In 2016, French buyers accounted for 14% of international purchasers, Spanish buyers made up 10%, and German buyers represented 5%. By 2026, those figures had fallen to 10% for France, 8% for Spain, and just 3.8% for Germany.
Hamptons said the slowdown in international demand is mainly driven by “higher stamp duty costs and a more punitive tax environment, particularly for overseas investors.”
Currently, an overseas buyer purchasing a £1 million property in England must pay £63,750 in stamp duty. If the property is a second home or intended for rental investment, the tax bill rises sharply to £113,750.
Against this backdrop, the purpose of overseas property purchases is changing. Over the past decade, the proportion of international applicants seeking buy-to-let investments has dropped from 17% to 12%. Meanwhile, the share purchasing second homes has fallen even more dramatically, from 6% to just 2%.
The report said this reflects “the cumulative impact of higher stamp duty surcharges and increasingly unfavourable tax policies for overseas landlords.”
At the same time, first-time buyers are becoming a growing force in the overseas property market. In 2026, first-time buyers accounted for 23% of all international applicants — nearly triple the level seen a decade ago.
The shift has been particularly notable among North American buyers. According to the data, 27% of North American applicants are first-time buyers, while only 10% are purchasing for investment purposes.
Over the past decade, North American buyers’ share of the UK overseas property market has surged from 8% in 2016 to 19% in 2026, making them the largest overseas buyer group today.
Regionally, international demand has declined across every part of the UK except London. Scotland saw a 26% drop in overseas demand, Wales fell 27%, and South West England declined by 20%. In contrast, London bucked the trend with an 8% increase, making it the only region to record growth.
Highest ever tax take at £939bn in single year
The latest figures from HM Revenue & Customs (HMRC) show that total UK tax receipts reached a record £938.8 billion in the 2025–2026 financial year, up 9.3% from £858.6 billion the previous year. Over the past two years, tax revenues have risen by a cumulative £110.2 billion, representing a 13.3% increase.
The figures mean that under Chancellor Rachel Reeves, Britain’s annual tax take is rapidly approaching the historic £1 trillion mark.
Data also shows that the UK’s annual tax burden has nearly doubled over the past 20 years. In the 2006–2007 financial year, total tax receipts stood at £428.6 billion; today, that figure has climbed to £938.8 billion, equivalent to 30.7% of GDP — around two percentage points higher than two decades ago.
VAT, Corporation Tax and National Insurance Reach Record Levels
In the 2025–2026 financial year, UK VAT receipts hit a record £180.7 billion. At the same time, corporation tax and related business taxes totalled £101.4 billion, which HMRC said was largely driven by growth in domestic corporate tax receipts. The increase in employer National Insurance Contributions (NICs), introduced in April 2025, also caused employer NIC payments to surge significantly.
Capital Gains Tax Revenues Jump 62%
Figures show that UK Capital Gains Tax (CGT) receipts rose to £22.18 billion in 2025–2026, a sharp 62% increase compared with the previous financial year.
Many investors and business owners chose to sell assets early and lock in the existing 20% CGT rate amid fears of future tax hikes, driving a temporary surge in tax revenues. While this provided a major short-term boost to public finances, analysts believe it may also have brought forward future tax receipts.
Inheritance Tax Hits Record High for Fifth Consecutive Year
Inheritance Tax (IHT) receipts also reached a new record. In the 2025–2026 financial year, UK inheritance tax revenues climbed to £8.46 billion, marking the fifth consecutive annual record high.
Although Britain’s tax burden is already at its highest level in 70 years, tax pressures are expected to continue rising in the coming years. Planned measures include:
From April 2027, pension assets will fall within the scope of inheritance tax;
From 2029, salary sacrifice pension arrangements may face tighter restrictions;
The government is also planning to reduce the cash ISA tax-free savings allowance in an effort to channel more money into stocks and shares ISAs.
At the same time, the freeze on UK income tax thresholds will remain in place until 2031. This means that even workers receiving inflation-linked pay rises could increasingly be pushed into the 40% higher-rate tax band through so-called “fiscal drag.”
Economists warn that the continuously rising tax burden could have long-term consequences for the UK economy and its ability to attract talent. The top 1% of earners currently contribute around 30% of total income tax revenues, and any reduction in this group could shift more of the tax burden onto middle-income households.
Tax experts generally believe that, with fiscal drag continuing, pressure on UK taxpayers is unlikely to ease in the near future.
Amazon becomes first UK retailer to begin drone deliveries
US e-commerce giant Amazon has become the first retailer to officially launch a local drone delivery service in the UK. The company has begun trial operations near Darlington in County Durham, northeast England, with drones able to serve addresses within a radius of around 7.5 miles (12 km) from its warehouse.
The service uses Amazon’s latest MK30 drones, which the company describes as its “most advanced drone system yet.” The drones are already carrying out deliveries in rural areas, transporting packages weighing up to 5 pounds (2.2 kg), including batteries, household cleaning products, cables and beauty items.
Under the current delivery model, parcels are placed in boxes and dropped into customers’ gardens from a height of around 12 feet (3.6 metres), meaning fragile items cannot currently be delivered through the system.
Amazon said its Prime Air drone delivery service can get products to customers within two hours, and believes there is strong demand for ultra-fast delivery services. The company plans to expand the programme to more parts of the UK in the future.
Responding to concerns over noise pollution, Amazon said the MK30 drones are “about as quiet as an average van delivery.”
Drone delivery trials are already taking place elsewhere in the UK. The National Health Service (NHS) is testing drones to transport blood samples in London, while Royal Mail has been using drones to deliver parcels to remote islands such as Orkney.
However, such services require a number of conditions to be met. For example, customers must have a garden to qualify for drone delivery, while rooftop gardens are currently excluded.
The rollout has also faced safety concerns. In February this year, an Amazon delivery drone crashed into an apartment building in Dallas, US, before falling to the ground. Following the incident, the company suspended drone deliveries to certain building types.
Amazon stressed that safety remains the top priority for its Prime Air system. The company said that during descent, onboard sensors can detect and avoid obstacles such as clothes lines and trampolines, even if they do not appear on satellite maps. Cameras mounted on the drones also continuously monitor surrounding airspace and can automatically take evasive action if another aircraft enters the drone’s flight path.
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