The budget is scheduled for 29 November 2025 and this year there has been a lot of kite flying about possible content, particularly for property owners. The chancellor has to raise around £40bn and sees the property sector as a good mining opportunity. Let’s take a look at what we know about each proposal and the likely implications.
The biggest headline grabber has been the proposal to levy National Insurance on rental income. There are so many different classes of NI that it’s hard to know what government intentions might be. Employees pay 8% Class 1 NI contributions from £1,048 to £4,189 of earnings per month and 2% above that. Dan Niedle, founder of Tax Policy Associates was reported to have said that levying NI in cases where landlords were already making a loss would be “unjust” and will add another unnecessary distortion. He was referring to the impact that section 24 has on landlords where they are taxed on their turnover, forced into higher tax rates and often lose their personal allowance. As a result, many pay more tax than they actually make in profit. Adding NI to this would be even more punitive and grossly unfair.
It has been reported that the measure could raise £2.18bn. 40% of landlords run their businesses through limited companies or are pensioners who currently do not pay NI, so unless pensioners are included as proposed by The Resolution Foundation, the actual take could be closer to £1bn.
There have been further ideas floated on the future of SDLT. It currently raises £13bn from residential property sales. In the 2024 budget the chancellor raised the additional rate paid by people who own more than one property from 3% to 5%. The government sees this as a way of deterring landlords from expanding their businesses and homeowners from buying second homes. Lower SDLT rates brought in by the Truss government in 2022 also expired in March 2025. First-time buyers start paying SDLT from £300,000 and everybody else from £125,000. Many see the tax as a drag on the housing market and on economic growth - it is levied on 60% of purchases.
The think tank Onward has proposed replacing SDLT and council tax with what it calls proportional property taxes. This would be an annual tax levied on property owners – not tenants – at 0.44% for properties up to £500,000. It says this would be enough to replace council tax income. Then higher rates of 0.54% would be levied on properties worth £500,000 to £1m and 0.81% above that. Property owners in London and the South East could be particularly affected as three quarters of UK properties above £500,000 are located there.
