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Chancellor Rachel Reeves could apply new tax to rental income in Autumn Budget, experts warn

ended 24. October 2025

CHANCELLOR Rachel Reeves could apply new tax to rental income in the Autumn Budget, experts have warned.

As we approach the Budget next month, rumours are swirling about potential tax changes – and one idea gaining quiet traction is the possibility of National Insurance (NI) being applied to rental income.

Currently, landlords pay income tax on their rental profits but no National Insurance, unlike the self-employed or those earning through work. 

Introducing NI on rental income would mark a significant shift – effectively treating property investors more like business owners, and substantially increasing the tax burden for many.

Supporters might argue it would bring greater fairness between those earning through work and those earning through property. 

Critics warn it could discourage investment in the private rental sector, reduce supply, and push up rents further.

At this stage, there’s no official confirmation, but with the Treasury looking for ways to raise revenue without headline tax hikes, this idea may be tempting for the Chancellor.

Laura Purkess, Personal Finance Expert at Investing Insiders, said she fears rental prices will rise further if this is implemented.

She added: "On the face of it, this may look like a fair and reasonable thing to do and probably won't lose the government many votes. But unfortunately, it's likely to be renters rather than landlords who feel the worst impact of this in the long run. 

"Extra cost pressures for landlords could accelerate the exodus from the market that we're already seeing, which would further reduce the supply of rentals and drive up rent prices even more. Landlords who do stick around would probably just end up passing on the additional costs to their tenants. It's a lose-lose for renters and the wider housing market."

Ross Lacey, Director & Independent Financial Adviser at Rayleigh-based Fairview Financial Management, said many landlords are considering selling up.

He continued: "Landlords are often seen as an easy target. There seems to be a perception by a large cohort of the voting population that it's easy, money-for-nothing and even predatory to rent out properties. Government knows this, and given the choice between ‘taxing pensioners’ or ‘making landlords pay their fair share’ – we know which one has the best optics. 

"However, we know from experience working with landlords that it's far from a walk in the park. Tenants trashing properties, not paying rent on time and profits being squeezed through higher tax and interest rates are leading to many landlords to consider selling up. 

"This won't actually make things better for renters. Any change to how national insurance is paid, may encourage landlords to own property through a limited company structure which is already a growing trend from the changes made a few years ago to how tax relief is applied to mortgage interest."

Scott Gallacher, Director at Leicester-based Rowley Turton, said this could be “final nail in the coffin” for landlords.

He added: "With the state of the government’s finances, I think all bets are off. The Chancellor will be looking for new revenue sources, and unfortunately, landlords might prove an easy target. 

“We’re already seeing many landlords selling properties or exiting the market completely, and the introduction of National Insurance on rental income could be the final nail in the coffin.”

Eamonn Prendergast, Chartered Financial Adviser at Bromley-based Palantir Financial Planning Ltd, said landlords are being hit from all sides.

He added: "If National Insurance were extended to rental income, it would represent a fundamental shift in how property investment is taxed in the UK. While it could be argued that it brings greater parity between those earning through work and those earning rental profits, it risks undermining confidence in the private rental sector at a time when supply is already stretched. 

"Landlords have faced successive tax and regulatory pressures over recent years from Section 24 mortgage relief changes to tighter EPC and compliance costs. Adding an 8% NI levy could be the final straw for many, particularly smaller or accidental landlords, leading to further sell-offs and upward pressure on rents.

“Older landlords would remain exempt, creating a two-tier system where retirees could see better net yields than younger investors. While that might sound like a silver lining, it distorts the market and risks discouraging new entrants.”
 

4 responses from the Newspage community

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Editor
Scott Gallacher
Director at Rowley Turton
With the state of the government’s finances, I think all bets are off. The Chancellor will be looking for new revenue sources, and unfortunately, landlords might prove an easy target. We’re already seeing many landlords selling properties or exiting the market completely, and the introduction of National Insurance on rental income could be the final nail in the coffin.
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Editor
Eamonn Prendergast
Chartered Financial Adviser at Palantir Financial Planning Ltd
If National Insurance were extended to rental income, it would represent a fundamental shift in how property investment is taxed in the UK. While it could be argued that it brings greater parity between those earning through work and those earning rental profits, it risks undermining confidence in the private rental sector at a time when supply is already stretched. Landlords have faced successive tax and regulatory pressures over recent years rom Section 24 mortgage relief changes to tighter EPC and compliance costs. Adding an 8% NI levy could be the final straw for many, particularly smaller or accidental landlords, leading to further sell-offs and upward pressure on rents. Older landlords would remain exempt, creating a two-tier system where retirees could see better net yields than younger investors. While that might sound like a silver lining, it distorts the market and risks discouraging new entrants.

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Editor
Ross Lacey
Director & Independent Financial Adviser at Fairview Financial Management
Landlords are often seen as an easy target. There seems to be a perception by a large cohort of the voting population that it's easy, money-for-nothing and even predatory to rent out properties.

Government know this, and given the choice between "taxing pensioners" or "making landlords pay their fair share" - we know which one has the best optics.

However, we know from experience working with landlords that it's far from a walk in the park. Tenants trashing properties, not paying rent on time and profits being squeezed through higher tax and interest rates are leading to many landlords to consider selling up.

This won't actually make things better for renters.

Any change to how national insurance is paid, may encourage landlords to own property through a limited company structure which is already a growing trend from the changes made a few years ago to how tax relief is applied to mortgage interest.
Copy

Editor
Laura Purkess
Personal Finance Expert at Investing Insiders
On the face of it, this may look like a fair and reasonable thing to do and probably won't lose the government many votes. But unfortunately, it's likely to be renters rather than landlords who feel the worst impact of this in the long run. Extra cost pressures for landlords could accelerate the exodus from the market that we're already seeing, which would further reduce the supply of rentals and drive up rent prices even more. Landlords who do stick around would probably just end up passing on the additional costs to their tenants. It's a lose-lose for renters and the wider housing market.