UK Treasury Plans National Insurance Tax on Landlords Ahead of Autumn Budget

Ahead of Chancellor Rachel Reeves' autumn budget, the Treasury is considering imposing national insurance contributions on rental income as a means to raise approximately £2 billion. This proposal, supported by some Labour MPs and government aides, aims to target landlords' "unearned revenue" without breaching Labour's pledge not to increase VAT, income tax, or national insurance rates by expanding the income base subject to the levy rather than raising rates. Employee national insurance contributions currently stand at 8% but reduce to 2% above a £50,270 threshold, and this levy would apply similarly to rental earnings. The move is part of broader efforts to address a looming £41 billion shortfall in balancing day-to-day spending with tax receipts by 2029-30, as highlighted by the NIESR economic think tank. Treasury officials emphasize that economic growth remains the most effective way to strengthen public finances, citing planning reforms expected to grow the economy and reduce borrowing as examples. Officials remain cautious to avoid crossing three key "red lines" that restrict the Chancellor's fiscal options.