Chancellor Rachel Reeves is reportedly considering applying National Insurance (NI) contributions to landlords' rental income as part of efforts to address a potential £40 billion shortfall in public finances. The move could generate an estimated £2 billion annually, according to Treasury sources cited by The Times.
Currently, rental income is exempt from NI, which is typically levied at 8% on employee earnings. By extending NI to property income, the government would target what it describes as 'unearned income' without breaching pre-election pledges not to raise VAT, income tax, or employee NI rates. Analysis suggests an 8% levy on net property income would have raised £2.18 billion in 2022-23.
Critics warn the policy could prompt landlords to sell properties, reducing rental supply and pushing up rents. However, supporters argue it could help renters enter the property market and note that the government's Renters' Rights Bill would offer additional tenant protections. Adam Corlett of the Resolution Foundation, which proposed the idea, said: 'There's no good reason why landlords should face lower tax rates than their tenants.'
A Treasury spokesperson declined to comment directly but reiterated the government's focus on economic growth through planning reforms, which are expected to boost the economy by £6.8 billion and reduce borrowing by £3.4 billion. The spokesperson added that the government is committed to keeping taxes low for working people, having already protected payslips from increases in income tax, employee NI, and VAT.
