Landlords face yet another potential tax squeeze, with reports suggesting the government may introduce National Insurance contributions (NICs) on rental income profits.

According to The Times, a leak indicates the measure could raise £2 billion for the Treasury if introduced in the autumn Budget.

Currently, landlords already pay income tax on rental profits, with some costs still eligible for relief. NICs, however, have so far only applied to earned income – from age 16 until state pension age – on wages above £242 a week or self-employed profits of more than £12,570 a year. Rates are 8% for employees, 6% for the self-employed, and 2% for income over £50,270.

This idea is just the latest in a string of summer tax rumours aimed at property investors, with possible reforms to stamp duty and capital gains tax on main homes also floated as revenue-raising options.

Adding fuel to the fire, Prime Minister Sir Keir Starmer has previously excluded landlords from his definition of “working people” – the group he says will be protected from higher taxes.

“Love affair with property could be tested to destruction”

Sarah Coles, head of personal finance at Hargreaves Lansdown, warns that layering NICs on top of existing taxes could drive more landlords to exit the market: “Property is already one of the least tax-efficient ways to invest, and by adding to the mountain of tax paid by landlords, it may persuade even more of them to sell up.”

Coles points out landlords already face:

• Stamp duty surcharge on purchases – increased from 3% to 5% last October.

• Income tax on rental profits, with only partial relief on mortgage interest since 2017.

• Frozen income tax thresholds since 2021, pulling more landlords into higher bands.

• Capital gains tax (CGT) on sales, now at 18% for basic rate taxpayers and 24% for higher rate taxpayers, with the annual allowance cut to just £3,000.

Add in buying/selling costs, maintenance, voids, tenant management, and agency fees – and Coles warns the “tax pain” is only one part of the challenge landlords face.

The iHowz view

If this rumour becomes reality, it would represent yet another blow to landlords who are already carrying one of the heaviest tax burdens of any business sector. Adding National Insurance on top of income tax risks pushing more investors to sell up, further reducing the supply of rental homes. At a time when tenant demand is at record levels, government should be encouraging landlords to stay in the market — not looking for new ways to drive them out.