In early 2025, reports began circulating from within HM Treasury suggesting the government was considering closing this decades-old “loophole.” The idea? Make landlords pay NI on rental profits, just like self-employed workers do on their earnings.
It’s just a rumour for now, but it has stirred real concern among landlords, property investors, and accountants alike.
So, what’s actually going on? Will you soon have to pay NI on your rental income? And what would that mean for your bottom line?
Let’s unpack it, clearly, calmly, and with a few practical tips to help you stay one step ahead.
Why Landlords Currently Don’t Pay NI on Rental Income
Here’s the key thing to understand: rental income from property, unless it’s from a furnished holiday let or you run a property business with multiple employees, is not classed as earned income.
Because of that, landlords don’t currently pay:
Class 2 NI (paid by most self-employed people)
Class 4 NI (paid on self-employed profits over a certain threshold)
That’s a big saving. For example, if you earn £25,000 in net rental income, and you were self-employed instead, you’d pay over £1,300 in NI contributions.
It’s no wonder the government is interested…
Why Is This Being Talked About Now?
A combination of reasons:
The tax gap – HMRC is under pressure to raise revenue. NI contributions make up a huge part of the UK tax base.
Fairness – There’s growing political momentum to level the playing field between landlords and workers. Some MPs argue it’s unfair that a self-employed electrician pays more tax on the same profit as a landlord with several properties.
Public sentiment – In a cost-of-living crisis, landlord tax breaks can be an easy political target.
According to The Times, discussions around NI on rental income were raised in early policy meetings for the next Budget. While there’s no official policy yet, the fact it’s being discussed at all is a red flag for landlords.
How Much Could This Cost Landlords?
Let’s say a change is introduced, and landlords must pay Class 4 NI, just like the self-employed.
Here’s how that might look:
| Net Rental Income | Class 4 NI Payable (2025/26 rates) |
|---|---|
| £12,570 | £0 |
| £20,000 | £445.80 |
| £30,000 | £1,045.80 |
| £50,000 | £2,245.80 |
| £100,000 | £3,256.60 |
These figures assume the 2025/26 thresholds and rates: 6% on profits between £12,570 and £50,270, and 2% above that.
It’s a significant new cost, especially for those who rely on property income in retirement or as a supplement to part-time work.
Could This Be Retrospective?
Very unlikely.
Any changes would almost certainly apply from the start of a new tax year, perhaps April 2026, giving landlords and advisers time to plan.
That said, advance warning doesn’t always mean fair implementation. Think of the changes to mortgage interest relief (Section 24), or the sudden increase in CGT for landlords. When tax changes hit property, they tend to hit hard.
Is There Anything Landlords Can Do Now?
If you’re a landlord, don’t panic, but don’t wait around either. Here’s what we recommend at Wainwrights Accountants:
1. Review your property income structure
Are you operating as an individual, or through a company?
Would incorporation help (or hurt) your overall tax position?
Could you classify part of your property income as a property business and make use of allowable deductions?
This is complex, and depends on your full financial picture.
2. Consider incorporation – carefully
Some landlords may benefit from moving properties into a limited company. Companies already pay NI (via Employers’ NIC), but the overall tax profile may still be better if you’re affected by higher income tax or NI charges.
📌 But beware Stamp Duty and Capital Gains Tax implications.
3. Maximise reliefs and expenses now
If changes are coming in 2026, now is the time to:
Make allowable capital improvements
Review your portfolio profitability
Consider restructuring loans to reduce net profits (e.g. to fall below the NI threshold)
4. Watch the next Budget closely
This could be one of the most significant changes to landlord taxation in years. Stay informed.
What Does This Mean for the Future of Buy-to-Let?
Let’s be honest, it’s getting tougher.
With:
Section 24 eating into mortgage interest deductions
Tighter CGT rules
EPC regulations on the horizon
And now, potential NI on rental income…
Being a landlord in the UK is no longer the tax-efficient cash cow it once was.
But with the right structure, tax planning, and support, you can still protect your profits.
There’s no legislation yet, just strong signals. But if history is anything to go by, tax changes for landlords often start as whispers and end up as headline policies.
At Wainwrights, we work with landlords across the UK, from accidental landlords with a single property to full-time portfolio landlords and property investors. If you want to get ahead of potential tax changes, now is the time to start planning.
🔍 Looking for personal advice?
At Wainwrights Accountants, we specialise in helping landlords navigate complex tax changes. Whether you’re a portfolio investor or a first-time landlord, we’ll help you stay tax-efficient and compliant.
