Landlords under 65 face National Insurance hit in Budget

Landlords under the age of 65 are likely to be among the biggest losers in the upcoming Autumn Budget should the government impose National Insurance Contributions (NICs) on rental income.

That’s according to an analysis from Hamptons which says that individual landlords paying income tax on their profits currently, are not liable for NICs.

However, the proposed change would see rates of 8% up to £50,270 and 2% thereafter, mirroring the rules for employees.

For landlords under the pension age, who make up a large portion of the buy to let sector, this could significantly reduce take-home income.

Profits could fall to just £295

Hamptons’ figures show that a typical landlord earning £16,478 a year in rent and paying £7,875 in mortgage interest would see their tax bill more than double, from £699 to £1,609.

For higher-rate taxpayers, profits could fall to just £295.

Younger investors, often with smaller equity buffers and higher borrowing costs, would be hit hardest.

Retired landlords would remain exempt, while those operating through limited companies would not be affected.

BTL profits hit

A Hamptons spokesperson said: “While the reform would improve parity between rental and employment income, it risks further reducing the profitability of buy-to-let – particularly for those with high mortgage costs and limited equity.

“The definition of ‘profit’ is key: if NICs are applied before mortgage interest relief, it would amplify the chances of higher-rate taxpayers having to pay tax on loss-making properties.

“Unlike the removal of mortgage interest relief (Section 24), which hit higher-rate taxpayers hardest, this proposal could have a greater impact on lower-income landlords.”

Hamptons’ report warns that the measure, originally floated by the Resolution Foundation, was once estimated to raise £3bn a year, although Hamptons believes the true figure would be closer to £1bn once exemptions are applied.

Other potential tax changes

Alongside the NICs proposal, other housing tax ideas are also under consideration, including Capital Gains Tax on primary homes sold for more than £1.5m.

A mansion tax on £2m-plus properties, and higher council tax multipliers for Bands F, G and H.

There might also be an expanded Help to Buy 2.0 scheme to boost housebuilding by helping first-time buyers bridge the affordability gap.

However, Hamptons says uncertainty is already shaping market behaviour.

It says sellers are delaying listings, buyers are adjusting expectations and landlords are restructuring portfolios.

Property118 commercial reality check

Tax reform is tightening again, and this time the target is landlords under 65. National Insurance on rental income would blur the line between employment and investment, but professional operators adapt faster than policymakers. Personal ownership is becoming a liability while structured ownership remains the path to control and continuity.

What serious landlords should do next

Act before the Budget window closes. Review your ownership model and test whether incorporation or partnership structuring offers a stronger position.

Revisit gearing and cash flow forecasts. Know your real post-tax returns, not just the headline rent.

If any properties fail the new efficiency test. Sell them on your terms, not the Chancellor’s.

Advantage through professionalism

Discipline defines the winners when policy shifts. Manage the portfolio as a business, not as a sideline. Keep accounting sharp and governance active. Plan around facts, not fear. Absorb new costs before others even notice them. Grow while casual landlords retreat. Every tightening of the rules reinforces the advantage that professionalism delivers.