If you’re a UK landlord, you’re probably going to be watching this year’s Autumn Budget like a hawk. There are no official announcements yet, but there’s a lot of talk going on behind the scenes.
The Chancellor needs to raise money and, while word on the street is that rates of Income Tax, National Insurance and VAT are not going to move, many are talking about how taxes on UK landlords might be next in the firing line.
My job as a property manager is to prepare you for what that might mean.
I’ll explain what is being talked about, what it could mean for you, and how to prepare without overreacting.
If you’d like a quick sense check on your own numbers, the team at J Property Management would be happy to talk through it with you.
Get in touch with the team here.
The context to the Autumn Budget
Every autumn, the Chancellor of the Exchequer details how the government plans to manage its money for the year ahead.
We’re expecting the Autumn Budget in early November. And since the new changes last Spring, it looks like policies aren’t having the effect The Chancellor thought they might.
Growth is slow, inflation is drifting back toward 4% and the funding gap is now somewhere around £40 to £50 billion. Markets are unsurprisingly twitchy, which means many believe that Reeves is coming for our taxes.
But whilst the government has promised not to change the big headline tax rates, that doesn’t mean they can’t bring new charges into the fold.
Here are some of the changes that are apparently being discussed in regards to the next budget.
National Insurance on rental profits
This is the most talked-about change right now, and it’s a big one.
Currently, landlords pay Income Tax on the profit they make from renting out property, but not National Insurance (NI). That’s because rental income isn’t classed as “earned income,” like a salary would be.
The proposal on the table? Make landlords pay National Insurance on rental profits – as well as Income Tax.
But what does this mean?
Well, say NI is set at 8%, if you earned £10,000 of annual rental profit, you would have to pay about £800 extra per property.
But a couple of practical points on the grey areas.
NI stops at state pension age, so retired landlords would not need to pay it. Young landlords however would definitely be affected.
It is also not clear whether limited companies would be included, or whether there would be any NI credit to mirror the 20% mortgage interest tax credit.
Because the detail is unclear, it’s important to know what your cashflow would look like if you were charged NI on rental profits or if you were charged it on pre-tax income.
Tax by stealth rather than headline rate rises
One way that the government could raise taxes is why keeping Income Tax thresholds frozen beyond 2028.
Freezes raise money quietly because more of your combined salary and rent creeps into higher bands as time goes on. Essentially, if your salary or rental income increases, but the tax thresholds stay the same, you end up paying more tax because more of your income is pushed into higher bands.
Take the £1,000 property allowance for example (that’s the amount of rental income you can earn tax-free before having to declare it). If they reduce or remove that, more of your rent becomes taxable so you end up paying more.
None of these are massive changes on their own, but together they can really add up. That’s why they’re called “stealth taxes” – your tax rate hasn’t changed, but your bill goes up anyway.
Replacing stamp duty with property taxes
Another big discussion is centred around removing stamp duty and replacing it with a national property tax paid on sale, possibly for homes over £500,000.
There are two ideas being floated:
1. A one-off tax when you sell your home (instead of stamp duty when you buy it).
2. A small annual property tax, similar to council tax, but based on your home’s current value.
The idea is to make it easier and cheaper for people to move house, especially first-time buyers. But this wouldn’t necessarily help landlords, especially if the stamp duty surcharge on second homes (currently 5%) stays in place.
If you’re planning to buy a new rental property, it’s worth keeping an eye on this and stress-testing your numbers with or without the surcharge.
Council tax changes
Council tax is still based on what your property was worth in 1991. Yes, really. The government’s been talking about updating it for years, and now they might actually do it.
If they go ahead, you could see:
1. New council tax bands
2. Bills that reflect today’s property values, not 30+ years ago
This would likely happen slowly, and probably not all at once. But it could mean higher council tax bills for landlords, especially in areas where prices have jumped since the early ’90s.
Capital Gains Tax and Inheritance Tax
When you sell your property, you usually pay taxes on the profit you make after expenses. Basic-rate taxpayers pay 18%, and higher-rate taxpayers pay 24%. The tax-free allowance has already been lowered to £3,000, and there’s talk it could be cut further.
There is also talk around tightening inheritance tax rules, including how much you can gift to children or grandchildren tax-free.
If you were already planning to sell or pass down a property, now might be a good time to have a conversation about timing.
So what does this all mean in real life?
If you’re a landlord, here’s what might be coming your way:
- Your tax bill could go up, even if tax rates don’t change.
- Landlords with mortgages could feel the squeeze more.
- Some landlords may decide to sell, which might reduce rental supply and push rents higher.
- Younger landlords or those with small portfolios might be hit the hardest if these changes land.
What can you do now to prepare?
You don’t need to panic – but it is a good idea to get your house (literally) in order.
Here’s what we recommend:
Run the numbers – build a simple 12-month cash flow for each property. Add in an estimate for NI and make sure your profits can still absorb it.
Check your ownership structure – if you own as an individual, now might be the time to compare that to running your rentals through a limited company.
Get your paperwork organised – especially if you’re thinking of selling. That includes receipts, tax records, mortgage statements and compliance docs.
Review your rents – make sure you’re charging market rate and not leaving money on the table. Small, regular increases tend to work better than big, sudden ones.
Talk to someone who understands property – whether it’s your accountant, your mortgage broker, or your property manager (that’s us!), don’t try to figure this all out on your own.
Want help working it all out?
At J Property Management, we work with landlords across the UK to manage their properties, cut the stress, and stay ahead of changes like these.
If you’d like a free pre-Budget check-up, we’re happy to chat to you about your options to understand how you can best prepare.
Get in touch and let’s get your properties Budget-ready.
