Landlords face paying National Insurance on rental income
7 months ago | 116 comments
Critics hit out at proposed National Insurance for rental income plan
12:01 AM, 29th August 2025, 7 months ago
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Chancellor Rachel Reeves reported targeting of ‘unearned income’ from landlords with a controversial plan to impose National Insurance contributions on rental income, has sparked an outcry.
Labour wants to raise £2 billion to tackle a £40 billion public finance deficit, according to Treasury sources quoted by The Times.
The move will avoid breaching the government’s pre-election pledges not to raise VAT, income tax or existing National Insurance rates.
The proposal would apply an 8% National Insurance charge to the £27 billion in net property income recorded in 2022-23, potentially generating £2.18 billion.
A Labour insider described property income as a ‘significant potential extra source of funds’.
Tax will drive up rents
However, the plan has drawn sharp criticism from the property sector, with experts warning it could shrink rental housing supply and drive-up rents.
Tom Bill, the head of UK residential research at Knight Frank, said: “Targeting landlords won’t lose the government many votes, but such moves invariably end up hurting tenants.”
He warns that landlords are already selling properties due to the Renters’ Rights Bill and stricter EPC regulations for rented homes.
Mr Bill says further taxes could exacerbate supply shortages and put ‘upwards pressure on rents’.
Rents will go up
Ben Beadle, the chief executive of the National Residential Landlords Association, echoed these concerns, and said: “Further punitive tax hikes on the rental sector will lead only to rents going up, hitting the very households the government wants to protect.”
Mr Beadle highlights existing pressures, including last year’s stamp duty increase on rental properties and proposed EPC upgrades costing landlords up to £15,000.
He urged the Chancellor to reform the tax system to encourage investment in new rental housing and points to Savills’ analysis that one million additional rental homes will be needed by 2031.
Landlords squeezed out
Marc von Grundherr, a director at Benham & Reeves, called the proposal ‘political point-scoring’ rather than sound policy.
He warns that it could squeeze small and medium-scale landlords out of the market, further straining rental supply and increasing rents.
Siân Hemmings-Metcalfe, the operations director at Inventory Base, criticised the plan as ‘short-term populism’.
She argues it risks deterring responsible landlords and undermining tenant protections.
Meanwhile, Sam Humphreys, the head of M&A at Dwelly, added that many landlords operate on thin margins, and this tax could drive them out, leaving tenants with fewer housing options and higher rents.
Tags:
EPC regulations, Landlord news, Landlord Tax, National Insurance rental income, Property Investment UK, rachel reeves chancellor, rental sector reforms, renters rights bill, Rising Rents, UK Housing Market
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The cost of EPCs and minimal returns?
Member Since January 2016 - Comments: 297 - Articles: 1
8:34 AM, 30th August 2025, About 7 months ago
Reply to the comment left by Ryan Stevens at 29/08/2025 – 10:26
If you look at the build to rent people they are looking at over 1500 pcm for 764sq ft 2 bed terraced house.
This is far above the market- but it is a new build- will all the advantages/disadvantages of a new build.
If the private rented sector can charge these levels then NI will not be an issue?
Perhaps Kier wants to level up the playing field for his dinner chum Larry Fink?
Look up Larry?
Member Since January 2020 - Comments: 91
8:38 AM, 30th August 2025, About 7 months ago
As a pensioner I paid in all my NI contributions throughout my full time working life of 47 years. Now as a pensioner and sole trader NI are not mandatory so I stopped paying in years ago.
Is this new idea of penalising landlords going to force me to start paying NI again at 72 years old?
Member Since October 2020 - Comments: 61
8:38 AM, 30th August 2025, About 7 months ago
Reply to the comment left by Robert at 29/08/2025 – 12:32
Correct. The uniparty loves corporations not small and medium size businesses, and especially not landlords.
Member Since August 2025 - Comments: 1
11:42 AM, 30th August 2025, About 7 months ago
Always £50 below the top rate for 3 properties if NI is put on landlords then put straight on to rents
The FIN
Member Since March 2018 - Comments: 182
12:57 PM, 30th August 2025, About 7 months ago
Such a huge increase in LL taxes is unlikely (due to the delay in tax receipts) and possibly a deliberate distraction from her real intention to increase tax on Landlords selling up their portfolio properties (immediate increase in tax receipts).
Member Since October 2022 - Comments: 3
11:46 AM, 31st August 2025, About 7 months ago
No one appears to have registered that being applied to rental income it is not NIC in the established sense because that is applied to wages, which is the p.a.y.e. equivalent of a landlords net profit. If this levy is to be applied to rental income, before offset of eligible expenditure, it will apply even if a landlord makes a trading loss and will just compound that loss. It is the analogue of VAT, not NIC and will cost the same as if it were VAT applied at the same rate.
Member Since May 2024 - Comments: 204
4:03 AM, 1st September 2025, About 7 months ago
Reply to the comment left by David100 at 29/08/2025 – 16:08
Labour used the excuse that they inherited a 22 Billion black hole from the conservatives after 14 years of them being in power and now within a year, the same black hole is now 40 Billion!
At this rate, can anyone imagine what it’s going to be like by the end of their term?
The UK will be bankrupt and we will all be starving as all of our money will be going in tax.
I thought I could hold out without selling up but I’ve now got the ball rolling for a tenant to buy 1 house. Unfortunately still a lot more to go…
I’ve already left the UK so, whatever money is left after the capital gains tax will be moved out of the UK and invested in the Middle East. I should have done it years ago.
Member Since January 2024 - Comments: 341
11:58 AM, 1st September 2025, About 7 months ago
Reply to the comment left by Desert Rat at 01/09/2025 – 04:03
The Polish are way ahead of you – they use our NHS, housing, benefits and education system, transfer their money back to Poland to build houses, etc for themselves and then often retire back in Poland (where they can still be entitled to UK state pension).
I’m not singling out the Polish, they are smart enough to do it – it is just an example. I’m sure plenty of other nationalities do it too. But it just demonstrates how broke (or woke?) the British system is!
Member Since October 2023 - Comments: 201
12:28 PM, 1st September 2025, About 7 months ago
Reply to the comment left by Ryan Stevens at 01/09/2025 – 11:58
I had a Polish tenant bring his Mother over to get MRI scans done on the NHS.
Even though she never lived in the country.
The system is so open to abuse, its shocking.
Member Since January 2024 - Comments: 341
12:40 PM, 1st September 2025, About 7 months ago
Reply to the comment left by David100 at 01/09/2025 – 12:28Don’t worry, the hospitals have a sign saying ‘You may have to pay’. I’m sure that works.
The problem is we don’t have an insurance based system, and nobody wants to do any admin. So the first question isn’t ‘Can you show that you are eligible for treatment at the UK taxpayer’s expense?’, it is ‘What’s wrong with you dear?’.
Any invoicing is after the event, by which time the patient has left the country!