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Should an NI-style charge on rent tax landlords' mortgage interest?

ended 24. September 2026

Rent attracts Income Tax but no National Insurance, and a research proposal published on 23 September asks whether it should. CenTax, the Centre for the Analysis of Taxation, an independent academic group, costs an equivalent of Class 1 NICs on rental profits, on savings income outside ISAs and on other non-dividend investment income at up to £4 billion in 2030, up to £3 billion of it from rent. That is a static estimate before behavioural responses, and the authors call it the upper bound. It is not government policy, but it lands five weeks before the 28 October Budget.

The catch is the word “profits”. Individual landlords of residential property cannot deduct mortgage interest from rental profit; the relief comes off the final tax bill instead. A wage-style charge on that profit would fall partly on money already paid to the lender. The report says the current base “overtaxes some landlords”, yet its costing does not restore a mortgage interest deduction, and its preferred fix, an allowance for the opportunity cost of borrowing, is modelled as relief on disposal.

  1. Is an NI-style charge on rent a fair levelling with wages, or a tax on borrowing unless mortgage interest is dealt with first?
  2. Who would it hit hardest, the heavily mortgaged landlord or the retired landlord living on rent from a property owned outright, and is that fair?
  3. Do you have a landlord client whose yield or interest cover would change under a charge like this? Please give as much detail as you can.

4 responses from the Newspage community

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Michelle LawsonVerified
Director at Lawson Financial
Taxation on landlords is already unfair and distorted. They are taxed on revenue rather than profits which just shouldn't be. The unintended consequences of this, and majority of the other poor decisions by the Government in the highly lucrative private rented sector, will only pass this on via higher rents to tenants. Further adding an NI liability would do the same. The offset of this would simply tax landlords on profits and then build in a NI element- most landlords would accept this. Any landlord with rental properties in their personal name will be at a loss and will be just another nail in the coffin.
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Tony SanchezVerified
Founder at Bridging Loan Directory
Before debating the rate, we need to agree what counts as profit. Two landlords receiving the same rent can have very different amounts left after mortgage interest. An additional charge that ignores that financing cost could tax money already paid to the lender.

That does not settle the wider question of fairness between earnings and investment income. But “levelling the playing field” is too simple a description if the calculation overlooks the cost of borrowing.

For property finance, the practical question is how much cash remains to cover repairs, void periods and unexpected costs. A heavily mortgaged landlord has less room to absorb another charge, although someone relying on an unmortgaged property for retirement income could also feel it sharply.

Any proposal should show the effect on both. A headline revenue estimate cannot tell us whether individual rental businesses would remain viable.
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Tony RedondoVerified
Founder at Cosmos Currency Exchange
An NI-style levy on rental profits sounds fair on paper, level the playing field between earned income and capital returns. In practice it's a mess. Section 24 already stops landlords deducting mortgage interest as a normal cost, so this surcharge taxes profit before interest, a straight tax on borrowing itself, hitting cash paid to lenders rather than real income. Leveraged landlords take the worst of it. Mortgage-free retirees absorb the hit from net profit with no default risk; geared landlords watch their interest cover collapse, often tipping net yield negative on paper profits that don't exist. This lands on top of years of squeeze with phased-out interest relief, stamp duty surcharges, EPC rules, expanding licensing. Add another levy and more individual landlords exit. Fewer rentals, higher rents for tenants with no real gain for affordability.
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Nouran MoustafaVerified
Practice Principal & IFA at Roxton Wealth
Calling this “levelling with wages” misses the most important technical issue: what exactly is the charge being applied to? For individual residential landlords, mortgage interest is not deducted from rental profit; instead, relief is given through a basic-rate tax reduction. An NI-style charge applied to that same profit figure could therefore tax income that has already been used to pay the lender.

That makes leverage the fault line. A heavily mortgaged landlord could see a much bigger hit to real cashflow than someone owning the same property outright, even where the headline rent is identical.

The sequencing matters. If an NI-style charge were introduced without changing the treatment of finance costs, part of the charge would effectively fall on borrowing rather than true post-interest profit.

I would not invent a client case study, but for highly geared landlords the impact on net yield and interest cover could be material where margins are already tight.