Treasury considering national insurance tax on rental income: report
The Treasury is considering a tax increase for landlords in an attempt to boost revenue by targeting unearned income in Rachel Reeves’s budget.
This includes proposals for applying national insurance (NI) to rental income in the hope of raising £2 billion, the Times reports.
Earnings from property, pensions, and savings are largely exempt from NI contributions, which are levied on other forms of income for employees at a rate of 8%. However, sources with knowledge of pre-budget preparations told the paper that the levy could be expanded to include rental income.
Allies of Reeves argued that doing so would not break her red lines because it would involve widening the earnings which national insurance applies to, rather than raising the rate. They likened it to putting VAT on private school fees.
The latest UK Public Sector Finances statistics will add increased pressure on Chancellor Rachel Reeves as the government battles to rein in spending.
The Office for National Statistics has put July’s borrowing figure at £1.1 billion, which is down from the year before, in what is a usually low month for public sector borrowing.
However, borrowing in the financial year to July was £60 billion, £6.7 billion higher than last year and the third-highest April-July borrowing since monthly records began.
Although July typically sees higher receipts due to self-assessed taxes, revenues still rose sharply, up £9.2bn compared to July 2024. Debt interest payments reached £7.1 billion in July, £200 million more than in July 2024. Higher debt servicing costs as a share of total revenues will leave the public finances more exposed to future economic shocks.
While the government’s manifesto promises to maintain investment and shield working people from tax hikes, analysis from NIESR suggests up to £40 billion in additional revenue may be needed to restore headroom and maintain investor confidence in the UK’s public finances
With debt interest already at massive levels, additional borrowing will be difficult, and unless the fiscal rules are changed, tax rises are inevitable. Reeves said the Budget of last year would not need to be repeated, but it has become clear that additional taxes are coming.
