Additionally, Rachel Reeves, the Labour shadow chancellor, has been floating big tax reforms that would dramatically alter what UK landlords can do. Together, these proposals plug a £40 billion hole in the public finances. They propose extending national insurance to incorporate rental income, which is currently exempt from the tax. The long-term economic impact of the expansion would bring the government an estimated £2 billion in revenues.
Reeves is considering repeal of the capital gains tax exemption. This reform would be limited to homes worth over £1.5 million, in addition to the national insurance changes. This purposeful shift would not only increase government revenue, but it would build a stronger financial foundation as economic pressures continue to increase.
Well, Reeves most definitely has a strategy. We can only hope she lives up to her promise to bring more details about the proposals during her next budget announcement later this fall. We can expect subsidy funded tax cuts in this budget, resulting in savings for anyone purchasing a new home with a price tag above £500,000. Estate agents are concerned that such changes might slow down the property market.
Stephen Morgan, shadow education minister Making sure the budget is “informed by Labour values” He stated, “I want to make sure that our budget is based on our Labour values, and that is what Rachel Reeves will deliver.” It’s not my place to opine on speculation. Our continued priority is supporting sustainable, inclusive growth in the economy and delivering our benefits for working people in every corner of the UK.
The proposed tax increases would hit landlords hard. Most of them rely on rent income for their profits. Currently, national insurance applies to employee earnings at a rate of 8%, and extending this to rental income would establish a new revenue stream for the government.
Labour insiders have referred to these proposals as “a significant potential extra source of funds,” highlighting their importance in addressing financial gaps while supporting public services.
Some estate agents are in a flap. They’re worried that a lack of clarity around possible future increases in property taxes would lead to demand evaporating in the fragile housing market. Furthermore, they warn that any slowdown from would-be purchasers as a reaction to these proposals could make worse the already fragile state of the housing market.