The UK Treasury is weighing up a new landlords tax in the upcoming autumn budget, targeting rental income as part of wider efforts to address a projected £40bn shortfall in public finances.
According to reports, the proposal centres on extending national insurance contributions to include rental income, which is currently exempt. Property income has been described by Labour insiders as “a significant extra source of funds” and a way to capture what they call “unearned revenue.”
If approved, the measure could raise about £2bn annually, with national insurance typically charged at 8% on employee earnings. Currently, income from property, savings and pensions does not fall under the levy.
Growing Political and Market Attention
The debate over property taxation has gained momentum in recent weeks. A Guardian analysis revealed that four cabinet ministers, including Chancellor Rachel Reeves, declared rental income on the MPs’ register of interests. In total, one in eight MPs have declared property rental earnings, including 43 Labour MPs, 27 Conservatives and seven Liberal Democrats.
Estate agents warn that speculation about new property taxes could dampen demand in an already price-sensitive housing market. Property website Zoopla said buyers may adopt a “wait-and-see” approach, particularly for homes valued under £500,000.
Other Tax Options Under Review
The Treasury is also examining broader housing-related tax reforms. Reports suggest Reeves is considering a tax on homes worth over £500,000, a potential national property tax to replace stamp duty, and a local property tax to eventually replace council tax.
Additionally, removing the capital gains tax exemption on primary residences valued above £1.5m is being studied as another way to increase government revenue.
Labour’s education minister Stephen Morgan declined to comment on the speculation but said the budget would reflect “Labour values” and focus on economic growth and public service renewal.
Treasury Response
A Treasury spokesperson reiterated that boosting growth is the priority: “The best way to strengthen public finances is by growing the economy. Changes to tax and spend policy are not the only ways of doing this, as seen with our planning reforms, which are expected to grow the economy by £6.8bn and cut borrowing by £3.4bn.”
The spokesperson added that the government remains committed to keeping taxes on working people low, highlighting previous protections on income tax, national insurance, and VAT.
