UK Property Tax Changes 2025: SDLT, Council Tax & National Insurance Updates

Property tax reform is one of the hottest topics at the moment, with headlines warning of new charges on landlords, homeowners, and investors. From proposed changes to Stamp Duty Land Tax (SDLT) and Council Tax through to potential National Insurance on rental income, speculation is running high about how the government plans to raise revenue.

While many reports remain rumours, some proposals have already reached the government consultation stage, giving property owners the chance to have their say before the Chancellor’s Autumn Budget.

Why is property tax reform dominating UK headlines in 2025?

It’s worth first explaining why so many stories are hitting the news about changing and raising more taxation from property. One of the main reasons behind the speculation is that the Office of Budget Responsibility’s July 2025 report suggested that the government’s forecast for the UK economy over the next 12 months is "overly optimistic". What this means is there is essentially a gap in future government receipts versus meeting their estimated financial obligations.

Independent forecasts* suggest the shortfall in government finances could be between £40 and £50 billion. With the Chancellor’s Budget expected around mid-November, this has prompted a surge of proposals from think tanks, industry bodies, and lobby groups on how additional revenue could be raised.

However, it’s worth noting that it’s not just property that is receiving lots of attention; other ways of raising tax, such as targeting ISAs (Individual Savings Accounts), limiting the amount people can take tax free from their private pensions from 55, and Inheritance Tax (IHT), such as the ‘seven year rule’ on gifts to save IHT and adjusting income rate allowances and thresholds, are also featured in the news.   

At this stage, most of the stories are just speculative, and some may even have been ‘tested’ in the press to see what reaction they receive prior to being considered by the government for the budget, so at this stage, it’s worth treating them as such.

However, some have already made it up the government’s agenda, and off the back of reviewing the ideas, they have moved to the ‘consultation phase’, which is often a prelim to making any official changes.

In reality, as landlords tend to hold property for a long period of time, the impact of potential changes to taxation always needs to be considered by investors, and it’s important to engage a qualified property tax expert that can review all of your finances and keep you up to date with current rules and regulations and alert you to and explain the impact of changes that might be made in the future.

Summary of Property Tax news Stories 2025

Here are the key property taxation stories we’ve seen over the summer:

Stamp Duty Land Tax (SDLT) reform: Will it be abolished or replaced?

As the Labour government is due its budget in the next few months, it’s only SDLT which is being subject to suggested changes which affect England and Wales. This is referred to as Land Transaction Tax (LTT) in Wales and Land and Buildings Transaction Tax (LBTT) in Scotland, but the rates and decisions for these countries are devolved. 

The current suggested solution hitting the headlines by one think tank: Onwards, authored by their Chief Economist Tim Leunig: -

1. Only tax homes that are bought for over £500,000
    
2. Pay the tax annually not upfront
    
3. Apply a 0.54% annual tax on properties bought between £500k and £1mn 
    
4. The 0.54% rate would apply to the amount paid above the £500k; for example, if you paid £600k, it would be applied to £600-£500k = £100k @ 0.54%, which would be £540 per year
    
5. For properties worth over £1mn, a 0.278% supplement would apply on top of the 0.54%.

It’s also proposed that the amount paid would increase annually by inflation.

The difficulty of introducing this, though, would be that the tax raised would be less initially, as it wouldn’t be paid upfront as a lump sum.

Council Tax reform: Could it merge into a single UK property tax?

The same report suggested above recommends, in addition to the SDLT change:

“Council tax should be replaced with a local proportional property tax levied on house values up to £500,000 with a minimum annual payment of £800. The rate would be set by local authorities. A rate of 0.44% would raise the same amount of revenue as council tax. This would be introduced immediately, on all properties, and would be payable by the owner, not the resident.”

In addition, the report suggests that all of the tax raised from properties up to £500,000 goes to local government, and anything above that goes to the national government.

Both these taxes are claimed to make the tax “fairer” for those paying less for a home and also for tenants who have to pay the current council tax, which in some areas can be quite a high proportion of the rent and their overall expenditure. 

The author recommends these taxes apply to owner occupied homes after being sold, while buy to let and short term let holiday let homes would fall under this system – even before they are sold, although it’s not clear who would pay the tax, the landlord or the tenant.

Social housing and shared accommodation, such as student halls and nursing homes, would be exempt.

It is important to be aware that the government are already consulting on changes to the way Council Tax is administered, the most important change being that payments are spread over 12 rather than 10 months; the deadline to respond was 12^th September 2025.   

Alternatively, it could be that as Council Tax is based on property values going back as far as April 1st, 1991, the decision could be that they are adjusted to updated property values, which could result in higher annual costs. 

Capital Gains Tax Changes: Will property be taxed at income tax rates?

This isn’t necessarily in the current headlines, but it has been mentioned prior to past budgets. Currently, if you sell a second property, the gains are subject to Capital Gains Tax (CGT). Up until 2024/25 the rate for property owners was 18% for lower rate taxpayers and 24% for higher rate taxpayers.

However, from 6^th April 2025, it’s now a flat rate of 24% for all taxpayers.

It is still possible, though, that the Chancellor could still align CGT with 20%, 40% and even 45% income tax rates.

*CGT does attract a tax-free allowance, and you can also deduct certain costs from the gain too. It’s important to use an expert property tax accountant that can look at all your financials, not just property gains.

Landlord Tax Reform UK: Could National Insurance be applied to rental income?

National Insurance is typically applied to an employee of a company and it helps to fund:

• Your government pension
• The NHS

And other benefits such as maternity allowance or jobseeker's allowance.

The view of the Resolution Foundation appears to go back as far as a paper they produced in September 2024, which suggested that:

“Rental income tax rates should rise, which is perhaps best done through a new class of National Insurance (NI), including for pensioner landlords. This could raise up to £3 billion in the case of full alignment with taxes on wages (including employer NI) – though there are likely limits on how rapidly tax rates should rise.”

Some landlords do already pay National Insurance, especially if they own property through a company and it provides a salary or if the landlord's main income is from rents.

The suggestion is that all landlords pay National Insurance at "a basic rate of 20% and an additional rate of 8% for property earnings above £50,270 a year".  

What happens next for property investor taxation in the UK in 2025?

Even more stories and ideas are likely to be published in the run up to the budget. If existing taxes are changed or introduced, sometimes it can be immediate, but that’s usually when it comes to SDLT, if it's National Insurance, CGT or income related, it will typically be in the next or future tax years. 

The key to property and taxation is to have expert advice from an accountant who either is or consults with a property tax expert.