If you own properties and are tax planning in Cheshire, the Treasury may soon target landlords.
Proposals for the Autumn Budget potentially include extending national insurance so that it includes rental income.
At present, the levy does not apply to rental income. The Government believes that ‘unearned’ property income could help plug the £40 billion hole in the public finances. It is estimated that expanding national insurance could raise approximately £2 billion in revenue.
Property analysts, however, have warned that by hitting landlords, tenants will also feel the pain. If rented stock dwindles and landlords sell up, or somehow pass on additional costs to tenants, there could be an upward ‘supply and demand’ pressure on rents. What options are therefore available to landlords in such a scenario?
Some landlords may opt to transfer their properties to limited companies instead of their own name. The act of ‘incorporating’ a property into a limited company subjects it to a different tax structure. This bestows certain advantages, not least corporation tax being lower than income tax.
In January 2025, there were around 400,000 buy-to-let properties in the UK held by companies. According to Companies House, a record 61,517 new buy-to-let limited companies were created in 2024. This was a 23% increase on the previous year.
Where the Government stands on this type of arrangement remains to be seen. Ultimately, it would need to decide whether it applies the same tax rules to limited company landlords as it does private landlords.
