The Generation Rent activist group has been urging the government for almost a year to levy National Insurance on landlords.
This week the government has selectively leaked the idea that it may force landlords to pay NI contributions on profits.
Landlords already pay income tax on profits from rent, although some charges can still be offset against this. National Insurance is currently paid on earned income from the age of 16 to state pension age. It’s payable on income over £242 a week or self-employed profits of more than £12,570 a year. It’s taxed at 8% for employed people and 6% for self-employed people. For income and profits over £50,270 it’s taxed at 2%.
It’s now emerged that Generation Rent – chaired for the past nine months by former Labour MP Karen Buck – has been advocating that landlords pay NI since last autumn.
Ahead of the last autumn Budget from Rachel Reeves, the group issued a statement saying: “Landlords who don’t have a mortgage pay a lower tax rate on their rental profits than someone in the same tax bracket who only has an income from their job. This is because wages are subject to National Insurance but rental profits are not.
“Requiring landlords to pay NI contributions would restore some balance with workers – though if this is announced, expect grumbling from landlords with mortgages, who have had some tax relief withdrawn on their interest payments.
“Profits from the sale of assets should also be taxed at least the same rate as income from work. Property, in particular, increases in value as a result of changes in the local area that have nothing to do with effort on the owner’s part. There is no reason for this type of asset to be taxed more generously than work, so the capital gains tax rate on property should increase to at least match income tax rates.
“Landlords who don’t have a mortgage pay a lower tax rate on their rental profits than someone in the same tax bracket who only has an income from their job. This is because wages are subject to National Insurance but rental profits are not. Requiring landlords to pay NI contributions would restore some balance with workers – though if this is announced, expect grumbling from landlords with mortgages, who have had some tax relief withdrawn on their interest payments.”
Generation Rent has a further link with Labour given that its chief executive, Ben Twomey, is a former Labour candidate.
This article is taken from Landlord Today