Autumn Budget 2025: latest predictions for landlords

Chancellor Rachel Reeves will deliver her second Budget this autumn. Slow economic growth and higher than expected inflation mean the government needs to close an estimated spending gap of £40 billion.

Despite strong rumours that the Treasury was planning to increase the rate of income tax, it’s now being reported the chancellor may freeze or reduce the income tax threshold. 

There could still be National Insurance or VAT increases, which would break the government’s manifesto pledge that they wouldn’t raise taxes for working people.

Ahead of the Budget, it’s been suggested that the government could make changes to taxes paid by landlords, such as capital gains tax, and inheritance tax.

Is the Chancellor planning further tax rises?

The government needs to close a spending gap of approximately £40 billion, according to the National Institute of Economic and Social Research (NIESR) think tank. 

The Labour Party pledged in their manifesto that they wouldn’t raise taxes for working people and, more specifically, that they wouldn’t increase income tax, VAT, or National Insurance.

However, as part of her first Budget in October 2024, Chancellor Rachel Reeves announced £40 billion of tax rises, including changes to National Insurance and capital gains tax.

A commitment to increasing spending on defence and the NHS as part of the Spending Review, plus u-turns on pensioner and disability benefit cuts, mean that speculation over further tax cuts is growing.

According to the Treasury and the Institute for Fiscal Studies, tax rises later this year are ‘inevitable unless economic indicators improve’.

While the Chancellor may stop short of increasing tax rates to honour the manifesto promise, she could tinker with thresholds, allowances, or other taxes such as inheritance tax or capital gains tax.

Autumn Budget 2025 – what do landlords need to look out for?

Government considering stamp duty overhaul

Rachel Reeves and her team are looking at replacing stamp duty with a national property tax, according to the Guardian. 

It’s been strongly rumoured that the Treasury is considering suggestions by the Onward think tank. It proposes removing stamp duty for buyers and introducing an annual tax for sellers. 

The tax would be paid at 0.54 per cent by sellers of properties worth over £500,000 and 0.81 per cent by sellers of properties worth £100,000 or more.

It’s estimated that the stamp duty is paid by 60 per cent of buyers and a new tax on sales over £500,000 would only affect a fifth of transactions.

At this stage, reports suggest that stamp duty for second home buyers (including landlords) will remain the same. 

Read more: Government considering radical overhaul of stamp duty

National Insurance for landlords?

The Treasury is considering charging National Insurance on rental income, according to reports.

Estimates suggest that an eight per cent levy on rental income could raise an extra £2 billion-£3 billion. 

The 360,000 landlords who earn between £50,000 and £70,000 in rental income a year could be required to pay an extra £1,000+ in tax. Some estimates have suggested that paying National Insurance could lead to to a 10 per cent drop in net return for some landlords.

As with previous tax rises, higher costs for landlords could result in higher rents for tenants. And further tax rises could lead to landlords selling their properties. A survey of buy-to-let mortgage brokers by lender Landbay found that 45 per cent think portfolio landlords would sell all of their properties if they have to pay National Insurance on rental income. A further 25% anticipate landlords with multiple properties will ‘slim down’ their portfolios.

It’s thought the change is being considered because it broadens the scope of National Insurance instead of increasing the rates (which would break Labour’s manifesto promise).

The idea has previously been put forward by the Resolution Foundation think tank, which was headed up at the time by the current Pensions Minister Torsten Bell.

Further capital gains tax changes?

Capital gains tax (CGT) rates for properties were left alone in the 2024 Autumn Budget (although rates for selling other assets were increased). As a result, capital gains tax for selling property could be a target this autumn.

The CGT rate for selling a property is currently:

• 18 per cent for basic rate taxpayers
• 24 per cent for higher and additional rate taxpayers

There’s also speculation that the capital gains tax allowance could be reduced further – despite being reduced from £12,300 to £3,000 in recent years.

Income tax rise now looks unlikely

Despite it breaking the Labour Party’s manifesto pledge, increasing income tax rates is being considered bFollowing strong rumours, it’s now been reported that the chancellor has decided against increasing income tax rates.

According to a report in the Financial Times, this is in part down to better-than-expected economic forecasts. 

One way the government could raise more money without increasing income tax is to extend the freeze on the tax thresholds. This is known as a ‘stealth tax’ as more people are dragged into higher tax brackets as wages rise.

Income tax thresholds, which determine the amount of tax people pay, are currently frozen until 2028 and have been the same since 2022. 

As part of the Autumn Budget 2024, Rachel Reeves said that income tax thresholds would start to rise again in line with inflation from the 2028-29 tax year. 

However, the Treasury may be considering extending the freeze to raise more revenue.

Changes to the inheritance tax threshold on the way?

The Labour government has already made a number of high-profile changes to inheritance tax. This includes the move to include unspent pensions as part of someone’s estate and into the scope of inheritance tax from April 2027 – which could impact many landlords.

Looking ahead to the 2025 Autumn Budget, one of the ways the Treasury could raise revenue is by reducing the £325,000 inheritance tax threshold. 

This threshold, which is the point at which people start paying inheritance tax, has been the same since 2009. HMRC estimates that currently only four per cent of estates pay inheritance tax. 

A lower threshold would mean a higher number of people would need to pay inheritance tax at 40 per cent, which could help to boost government funding.

Alternatively, the government could increase the 40 per cent inheritance tax rate. This wouldn’t impact the number of people who pay inheritance tax, but it would mean higher bills for those that do.

Tax-free ISA limit to be slashed?

Slashing the tax-free Individual Savings Account (ISA) limit is another rumoured move that could affect landlords with savings. 

Savers can currently put up to £20,000 in an ISA tax-free each year. However, the Treasury could half this to £10,000 as part of the Budget. 

Although this will reduce the amount people can save without paying tax, it’s been suggested that the government doesn’t view a lower allowance as penalising savers. Instead, it hopes to encourage people to invest in stocks and shares ISAs to help stimulate the economy. 

This article was first published on 7 August 2025 and updated in September, October, and November.

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