Fears that landlords could face another stamp duty hike
1 year ago | 3 comments
Labour is gearing up for a tax raid on landlords – claim
9:44 AM, 19th May 2025, 11 months ago
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Chancellor Rachel Reeves is facing mounting calls from Labour MPs to impose new taxes on landlords, aiming to address a looming budget deficit without breaking the party’s promise to avoid tax hikes on ‘working people’.
The news comes as a survey carried out by the National Residential Landlords Association found that 83% of landlords are worried about a hike in Capital Gains Tax when selling a rental property.
The Prime Minister, Keir Starmer, has already claimed that landlords do not qualify as working people, paving the way for potential fiscal measures targeting rental income.
Nick Williams, a former Downing Street aide, has emphasised the need for tax revenue, and says in The Times that ‘Taxes would have to go up’ to close the financial gap.
The Times also says that Labour MPs are advocating for higher taxes on rental earnings, a move that could reshape the UK’s private rented sector.
Landlords pay income tax
The National Residential Landlords Association, Chris Norris, pointed out to the Daily Telegraph that landlords already pay income tax on rental income.
He said further taxes would ‘increase complexity’ and deter investment in the PRS – which could deepen the housing crisis.
He added: “Rumours concerning the imposition of a ‘rental income tax’ are misleading as they suggest that such income is not already taxed just like all other personal and business income.
“Since 2015, landlords have faced a series of punitive tax and regulatory changes, such as the removal of mortgage interest relief and the introduction and subsequent hiking of the stamp duty levy on additional properties.”
He warns that investment has already been hit, and landlords have left the PRS due to financial pressure – leading to less choice and higher rents for tenants.
Possible landlord tax options
The Telegraph has looked at what the potential tax options are for Ms Reeves and one proposal involves requiring landlords to pay National Insurance on rental profits.
That would, supporters say, align their contributions with those of self-employed workers.
Robert Salter of Blick Rothenberg explained that landlords could face rates of 6% on profits between £12,570 and £50,270, and 2% on higher amounts.
However, Ian Cook, a financial planner at Quilter, points to complications, as many landlords, with a median age of 58, are near or past the state pension age, when National Insurance typically ends.
This could necessitate a complex two-tier system, he said.
Rental income tax band
Alternatively, Mr Cook suggests establishing a distinct tax band for rental income.
Currently, landlords benefit from a £1,000 tax-free property allowance, with additional income taxed at standard rates.
For instance, a landlord earning £45,000 from employment and £8,000 from rentals faces a mix of 20% and 40% tax rates on the latter.
Mr Cook says that couples often minimise tax by allocating income to a non-working partner’s personal allowance.
A dedicated rental tax band could curb such strategies and boost Treasury revenue.
Adding VAT to lettings
Another option is applying VAT to residential lettings, following the precedent set by furnished holiday lets.
Mr Salter warns, however, that a 20% VAT rate would likely increase rents, as landlords pass costs to tenants.
He told the Telegraph: “Introducing VAT on regular residential property lettings would clearly result in significant rental property inflation.”
The Resolution Foundation has previously supported aligning rental income taxation with other income types, proposing a new National Insurance class.
Landlords are worried about CGT
Meanwhile, a survey by the National Residential Landlords Association (NRLA) reveals that 83% of 882 landlords are most concerned about a potential increase in Capital Gains Tax (CGT) on rental property sales.
It found that 61% are ‘very concerned’ and 22% ‘slightly concerned’.
The NRLA says the survey highlights growing anxiety among landlords, with 53% very concerned about the Renters’ Rights Bill and 35% slightly concerned.
The organisation’s chief executive, Ben Beadle, said: “These figures lay bare the fragility of investor confidence, with many feeling anxious about the overall direction of government policy as regards tax, rental reform and energy efficiency.
“We have a tax system which disincentivises investment, and a punitive Capital Gains Tax hike on the sale of rental properties is likely to exacerbate the situation.”
Tags:
Capital Gains Tax increase fears, Housing crisis UK, Labour tax policy, Labour tax policy landlords UK, National Insurance, National Insurance on rental profits, private rented sector tax reform, Rachel Reeves, rental income tax, UK landlord tax, VAT on rentals, VAT on residential lettings
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Member Since January 2025 - Comments: 90
1:19 PM, 19th May 2025, About 11 months ago
And if further historical evidence is required, look no further than the rise of the National Trust. Its vast holdings were not acquired through free-market transactions, but through state-sanctioned confiscation. Capital Transfer Tax, introduced in 1975, was levied at rates of up to 75% on lifetime gifts and inheritance transfers . The Investment Income Surcharge, introduced in 1965 and raised through the 1970s, took effective marginal tax rates on unearned income — such as rent and dividends — to as high as 98%.
These measures were not accidental. They were part of a broader state agenda to dismantle private land ownership. Unable to meet these confiscatory tax burdens, many families were compelled to relinquish estates. The National Trust, backed by favourable statutory arrangements, became the primary recipient. What was framed as ‘heritage preservation’ was in practice a politically engineered asset seizure, transferring vast tracts of private land & property into public or quasi-public hands under the moral camouflage of public good.
Member Since April 2024 - Comments: 19
7:30 PM, 20th May 2025, About 11 months ago
Let your tenants know why their rent is going up again. Let them know the exact reason. Then tell them to thank their government
Member Since May 2025 - Comments: 2
6:26 AM, 21st May 2025, About 11 months ago
Reply to the comment left by Person Of The People at 19/05/2025 – 12:40
I have to congratulate you on a superbly written comment which I agree is the “writing on the wall”. I have long said Landlords are effectively an arm of the Government now.
I hope you will publish this everywhere you can and send to Landlard Associations. The point is Landlords have no voice, never will. They’re the minority. The House of Lords have no real powers either.
I watched this video yesterday and the powers being afforded to Council’s is staggering. Surely a civil liberty that they would be allowed to enter a home/premises without warrant. Draconian powers similar to anti-terrorism laws!
https://youtu.be/dXZa2ShrLyQ?si=9Vwbs3nk9obSwCRB
We really live in a Communist state. Big Brother everywhere. Tickbox surveys but Council’s donwhatever they want. Charges for driving anywhere. Check out 15 minute cities…
Member Since May 2025 - Comments: 2
7:42 AM, 21st May 2025, About 11 months ago
Reply to the comment left by Person Of The People at 19/05/2025 – 12:40
You need to run for PM – you’d have my vote.
Exactly as I see it.. Cannot understand how those who do not contribute to taxes are allowed to vote. Naturally they will vote for the party that keeps their “lifestyle” intact.
Reminds me of that scene in the film Gladiator where Gladiator is told he needs the mob (critical numbers) on his side to win his freedom. As it is the mob that keeps Caesar in power and he has to keep them pleased…
Member Since January 2015 - Comments: 1435 - Articles: 1
11:41 AM, 23rd May 2025, About 11 months ago
Reply to the comment left by Person Of The People at 19/05/2025 – 12:40
It was the C18th revolutionary colonists in America who gave birth to the phrase “We used to say no taxation without representation” and had the Boston tea party to drive the point home.
Before my time, I hasten to add, lol.
But probably about time this country did similar in response to the ill thought out and downright ludicrous actions of our Government.
Member Since May 2018 - Comments: 1999
10:40 AM, 27th May 2025, About 11 months ago
Reply to the comment left by Keith Wellburn at 19/05/2025 – 12:35
Landlords wouldn’t significantly reduce their rents to match the VAT figure. If labour adds VAT to rent then landlords will pass that on as higher rents; tenants will be paying it.
And of course landlords are already taxed on rental income at a higher rate than other income because they cannot offset their finance costs against rents (which also puts rents up for tenants).
Member Since March 2024 - Comments: 281
12:11 PM, 27th May 2025, About 11 months ago
Reply to the comment left by Beaver at 27/05/2025 – 10:40
Yes, but S24 was announced ten years ago and many landlords have mitigated its impact, including myself who started selling off one a year in 2015. And a very significant number have no mortgages (like me now, down from seven figures to zero)
There was already a SDLT surcharge (3%) but it didn’t stop Reeves wanting more (5%). And 5% won’t stop her going to 8% to match Scotland if she chooses.
With the current incumbents, just like the last lot, logic and unintended consequences will be absolutely no barrier to tax changes and especially so if it plays well to the usual suspects, Shelter, GR and the voters who don’t realise the folly of their cheerleaders.
Member Since May 2018 - Comments: 1999
12:44 PM, 27th May 2025, About 11 months ago
Reply to the comment left by Keith Wellburn at 27/05/2025 – 12:11
True, many landlords have progressively sold, phasing the sale to minimise the CGT bill. And many others will also have mitigated the impact by buying properties in limited companies so that they can continue to offset their finance costs and pay CT rather than CGT if they need to sell in the future. But none of that benefits tenants.
The overall effect of labour policies is that they (1) restrict choice for tenants (2) raise rents for tenants (3) discourage investment other than in limited company structures. Every time labour meddle in the housing market they make things worse for tenants and small portfolio landlords, and favour the big incorporated landlords that are good at evicting tenants and maximising rents. The only good thing that you can say about labour policies is that they are not quite as bad as SNP policies.
Member Since January 2023 - Comments: 317
9:29 AM, 1st June 2025, About 10 months ago
Reply to the comment left by Peter Merrick at 19/05/2025 – 13:05
Also don’t forget in Rep of Ireland that LLs pay their equivalent of national insurance on rental income . HOWEVER since 2019 they have been able to claim full interest tax relief on mortgaged properties.
IN REP. OF IRELAND…
How do I calculate my rental income tax?
The amount of tax on rental income depends upon your profits for the tax year in question, your allowable expenses, your personal circumstances (i.e. marital status, tax rate band), and any additional sources of income you may have.
In general, your rental income will be taxed at either the standard rate of 20% or the increased rate of 40%. In addition, you will be liable to pay 0.5% to 8% Universal Social Charge (USC), depending on any additional earnings you may have. If you are an Irish Tax Resident, you are also liable to pay PRSI at 4% on your rental income profit.
You may also be required to pay preliminary tax, which is a payment to the Revenue Commissioners based on your estimated tax liability for the current year. However, if it is your first year as a landlord, you do not need to pay preliminary tax.
Landlords must file their tax returns and make any required payments by 31 October of each year.
Member Since May 2018 - Comments: 1999
10:01 AM, 2nd June 2025, About 10 months ago
Reply to the comment left by Crouchender at 01/06/2025 – 09:29
It seems that faced with a crisis in the rental market, the Republic of Ireland has woken up to the fact that providing a safe roof over somebody’s head is a socially useful thing to do. And that government can’t and won’t do it alone.