A think tank with strong ties to the Labour Party has suggested that landlords are “under-taxed” and should contribute more through income tax.

The Resolution Foundation – widely regarded as influential with the current government – has proposed cutting employee National Insurance by 2p while raising Income Tax by 2p. The move would be cost-neutral for employees but would increase the tax burden on groups who don’t pay employee NI, including landlords, pensioners, and the self-employed.

Who’s Behind the Proposal?

The Foundation’s influence in government is notable:

  • Torsten Bell, former director, is now a Treasury minister preparing the November Budget.

  • Dan Tomlinson, Exchequer Secretary to the Treasury, is also a former staffer.

  • Richard Hughes, now head of the Office for Budget Responsibility, previously worked there too.

The current chief executive, Ruth Curtice, spent over 15 years at the Treasury, most recently as director of fiscal policy.

Speaking on BBC Radio, Curtice was asked who would pay more under the Foundation’s proposal. Her immediate answer: “landlords.” She argued a 2p rise in income tax for landlords would be “relatively small” and added there was “no reason landlords should pay less income tax than their working tenants.”

The Bigger Picture

The Foundation says the change would raise £6 billion. But it argues wider tax increases of at least £20 billion a year by 2029-30 will be needed to keep the Chancellor within her fiscal rules.

According to Curtice, a combination of:

  • Policy U-turns since the last Budget,

  • Higher borrowing costs, and

  • A likely downgrade in UK productivity forecasts,

all point towards the need for “significant fiscal consolidation” – the policy world’s term for tax rises.

The Foundation insists the UK’s £1 trillion-a-year tax system should be reshaped around “protecting workers’ pay packets” by reducing the double burden of NI and income tax on employees and shifting more of the load onto those outside the system – notably landlords.

Takeaway for landlords: While only a think tank proposal at this stage, the Resolution Foundation’s close ties to Treasury suggest it could feed directly into November’s Budget. Landlords should be alert to the possibility of further tax rises targeting rental income in the coming fiscal plans.