Rachel Reeves could tax landlords’ rental income’ with national insurance levy | Personal Finance | Finance
The Treasury is reportedly mulling over a tax hike on landlords by imposing national insurance on rental income, ahead of Rachel Reeves’ autumn budget.
It’s said that officials are examining proposals to increase a levy on property earnings in an attempt to raise £2 billion, as the Chancellor seeks ways to boost cash amid grim warnings about the state of public finances.
This move is supported by some Labour MPs and Government aides, with proponents arguing that landlords represent a means of targeting “unearned revenue”, according to The Times. Currently, employee national insurance contributions (NICs) on other earnings stand at 8 per cent, but drop to 2 per cent above a £50,270 threshold.
Allies of Ms Reeves have reportedly argued that these proposals avoid breaking the Labour pledge not to raise VAT, income tax or NICs because they mark an expansion of the income to which this levy is applied, rather than an increase in its rate, and could generate around £2 billion.
Officials are trying to find ways to raise revenue without crossing these three “red lines,” which limit Ms Reeves’ options when it comes to balancing the books.
The scale of the challenge facing her in the autumn budget was highlighted by the NIESR economic think tank warning this month that Ms Reeves is set for a £41 billion shortfall on her self-imposed rule of balancing day-to-day spending with tax receipts in 2029-30.
A Treasury spokesperson stated that the best way to bolster public finances was through economic growth, adding: “Changes to tax and spend policy are not the only ways of doing this, as seen with our planning reforms, which are expected to grow the economy by £6.8 billion and cut borrowing by £3.4 billion.
“We are committed to keeping taxes for working people as low as possible, which is why at last autumn’s budget, we protected working people’s payslips and kept our promise not to raise the basic, higher or additional rates of income tax, employee national insurance, or VAT.”
