Understanding property tax reform in 2025: what landlords and homeowners need to know

Property tax reform continues to dominate headlines in 2025, with talk of new and revised charges for landlords, investors, and homeowners.

From updates to Stamp Duty Land Tax (SDLT) and Council Tax to potential changes such as National Insurance on rental income, speculation is rife about what may appear in the upcoming Autumn Budget.

While much of the coverage remains speculative, several reform ideas have now entered the government consultation phase, giving property owners an opportunity to share feedback before any formal announcements are made.

Why is property taxation such a major talking point?

Recent economic reports have fuelled much of the current debate. The Office for Budget Responsibility (OBR) warned in July 2025 that government financial projections for the year ahead were “overly optimistic”, indicating a potential gap between income and spending.

Independent forecasts estimate this shortfall could reach £40–50 billion, prompting think tanks and policy experts to propose various revenue-raising measures ahead of the mid-November Budget.

It’s not just property being discussed — there’s also talk of changes to ISAs, inheritance tax, and pension withdrawal limits. However, because property accounts for such a significant portion of personal wealth in the UK, the sector naturally attracts particular attention.

For landlords and homeowners, it’s important to separate headline speculation from genuine policy progress. While many ideas are being floated, only a few have reached formal consultation — the stage before official reform.

Stamp Duty Land Tax (SDLT): could it be replaced?

One of the most talked-about topics is SDLT reform, which applies to England and Wales (where it’s known as Land Transaction Tax). A recent report by think tank Onward, led by economist Tim Leunig, proposes an entirely new approach:

• Only homes bought for over £500,000 would be taxed.

• The tax would be annual rather than paid upfront.

• A rate of 0.54% would apply to the value above £500,000.

• Homes worth over £1 million would pay an additional 0.278% on top.

• Rates would rise annually in line with inflation.

While this could make higher-value homes more expensive to own long-term, it might also ease the upfront cost of moving. However, it would mean slower revenue collection for the government in the short term.

Council tax reform: towards a new “property value tax”?

The same report also suggests merging Council Tax into a new local proportional property tax based on property value. The proposal includes:

• A minimum annual payment of £800 on properties up to £500,000.

• A rate of 0.44%, adjustable by local authorities.

• The tax to be paid by the owner, not the resident.

Revenue from properties valued under £500,000 would go to local councils, while higher-value properties would contribute to national funds.

The aim, according to the report, is to make property taxation fairer and to reduce costs for tenants currently paying council tax on rental homes.

Meanwhile, the government is already consulting on administrative changes to council tax, including a move to allow 12-month payments instead of 10. There’s also the possibility of updating property valuations, which could increase bills for many households.

Capital Gains Tax (CGT): What’s next for property sellers?

Although not currently headline news, Capital Gains Tax remains a key concern for investors.

As of April 2025, the rate on property gains is a flat 24%, regardless of income bracket. However, there is speculation that rates could eventually be aligned with income tax bands (20%, 40%, and 45%).

CGT continues to offer a tax-free allowance, and landlords can still deduct certain costs from their gains — making expert financial advice essential before selling.

National Insurance on rental income: could it happen?

One of the more controversial ideas comes from the Resolution Foundation, which suggested that landlords could start paying National Insurance contributions on rental income — including pensioner landlords.

The proposal recommends:

• A basic rate of 20%, with an additional 8% on income above £50,270.

• The measure could raise around £3 billion if fully aligned with employee and employer contributions.

While some landlords already pay National Insurance through limited companies or as self-employed individuals, this change would make contributions universal across all property income.

What could happen next?

With the Autumn Budget approaching, more proposals and ideas are likely to surface. Some tax changes can take effect immediately (such as SDLT adjustments), while others — including National Insurance or CGT updates — would typically apply from the following tax year.

For property investors, it’s crucial to stay informed and work with a qualified property tax specialist who can assess your portfolio and prepare for possible policy shifts.

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