A think tank with strong connections to the Labour Party has argued that landlords are significantly under-taxed and should be subjected to higher income tax rates. This proposal comes from the Resolution Foundation, an influential economic think tank that has a track record of shaping policy debates in the UK. The foundation claims that landlords benefit from a tax structure that favours them more than working people, a key constituency for Labour.
In its latest proposal, the Resolution Foundation suggests that “working people” — a term regularly used by Labour — should receive a 2p reduction in employee National Insurance (NI) contributions. The reduction would be offset by a corresponding 2p increase in Income Tax (IT), ensuring that the overall tax burden on employees remains unchanged. However, the proposed income tax increase would disproportionately affect groups such as landlords, pensioners, and the self-employed, who pay income tax but are not required to contribute to employee National Insurance.
The Resolution Foundation’s recommendations are significant because of its close ties to the current government. The foundation’s former director, Torsten Bell, is now a Treasury minister, where he is preparing the upcoming November Budget. Other key figures associated with the foundation include Dan Tomlinson, the Exchequer Secretary to the Treasury, and Richard Hughes, who now heads the Office for Budget Responsibility, an independent body responsible for scrutinising the government’s fiscal policy. These connections give the foundation a degree of influence over the direction of economic policy in the UK.
The foundation’s current chief executive, Ruth Curtice, was previously the director of fiscal policy at the Treasury, where she worked for over 15 years. Her extensive experience in government finance and policy makes her a highly credible figure in the debate over the UK’s fiscal future. During a recent interview on BBC Radio, Curtice was asked to clarify who would bear the brunt of the proposed tax changes. She immediately pointed to landlords, stating that they would be the primary group impacted by the suggested increase in income tax. Curtice argued that a modest 2p increase in income tax for landlords would not be overly burdensome, especially considering that landlords currently pay less in taxes than their employed tenants.
Curtice also argued that there was no logical reason for landlords to be taxed at a lower rate than the tenants they rent to. She explained that the tax system should be reformed to ensure fairness across all income groups, including those who benefit from income-generating properties. The Resolution Foundation’s proposal is part of a wider push to make the UK’s tax system more progressive, ensuring that high-income individuals and asset owners contribute their fair share. The foundation estimates that the proposed tax changes could raise an additional £6 billion for the Treasury.
The Resolution Foundation’s call for higher taxes on landlords comes at a time of significant economic strain in the UK. Curtice explained that the combination of recent policy U-turns, rising borrowing costs, and a potential downgrade in the UK’s productivity outlook means the government will need to implement “significant fiscal consolidation” — a euphemism for tax rises — to meet the government’s fiscal rules. As such, the foundation believes that £20 billion in additional taxes will be needed by 2029-30 to address the UK’s fiscal challenges.
In this context, the foundation argues that it is essential for the Chancellor to take decisive action to ensure the UK’s £1 trillion tax system remains on a sustainable path. One of the foundation’s key recommendations is to focus on reducing the current tax bias against employees. In their view, the double taxation of income through both National Insurance and Income Tax is unfair and needs to be addressed. The Resolution Foundation has voiced support for the actions taken by the previous Conservative Chancellor, Jeremy Hunt, who acknowledged the issue of double taxation and pledged to reform the system. The foundation believes the current Chancellor should continue these reforms by shifting the UK’s tax base away from National Insurance and onto Income Tax.
The foundation’s proposed tax changes would raise £6 billion from individuals who currently pay Income Tax but not National Insurance, including pensioners, landlords, and the self-employed. In addition to its call for higher taxes on landlords, the foundation advocates for broader reforms to make the tax system more efficient and equitable, ensuring that all taxpayers contribute fairly to the UK’s financial needs.
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