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17/12/25 3:30 pm
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Introducing National Insurance contributions on rental income at a rate of 8% up to £50,270 and 2% thereafter could significantly impact landlords’ profits, according to Hamptons.
As the Autumn Budget approaches, the firm has studied potential housing-related tax reforms and believes this proposal - probably levied on pre-mortgage profits – is particularly likely. It explains: “Our analysis shows that a typical landlord earning £16,478 annually in rental income and paying £7,875 in mortgage interest would see their tax bill more than double - from £699 to £1,609.”
The change would disproportionately affect younger, unincorporated and lower-income landlords and risks further reducing the profitability of buy-to-let, says Hamptons.
Another likely reform is the creation of additional top council tax bands, which would particularly impact ‘super prime’ owners in London and the South. Band H currently groups everything from new-build four-bedroom homes to exclusive mansions; charging owners of expensive homes more could help reduce bills for mid- and lower-market homes.
While the possible introduction of higher council tax rates for top bands could raise significant revenue, it could create a new cliff edge in the market, where homes just above the threshold for higher rates become less attractive.
Applying Capital Gains Tax on high-value primary residences sold over an agreed threshold – rumoured to be £1.5m - would mark a significant shift, while a new Mansion Tax could depress values of affected homes by 5–10% and create a cliff edge at the £2 million mark, with buyers offering just below the threshold to avoid triggering the tax, says Hamptons.
The suggestion of an annual property tax replacing stamp duty and council tax is less likely, it predicts. This could likely be levied at 0.48% of a property’s value and the impact would vary significantly; in London, 75% of households would face higher bills. The reform would shift tax burdens to owners, potentially affecting renters if landlords pass on costs.
Another less likely idea is shifting stamp duty to sellers for homes priced over £500,000. This would reduce the upfront cost for buyers and could stimulate market activity below the threshold but risks creating another cliff edge.
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