Writing in Landlord Today, Sarah Coles of Hargreaves Lansdown outlines ways landlords are likely to pay more tax, and how they can help defray some of these costs.

The article can be seen here, and here’s a structured response addressing the key points of the article:

The Rising Tax Burden in 2025 and Strategies to Mitigate It

As we move into 2025, a combination of frozen thresholds, increased rates, and the expiration of certain tax breaks is set to intensify the tax burden across various areas. Here’s a breakdown of the expected tax changes and some practical strategies to mitigate their impact:

1. Income Tax and National Insurance (NI)

• Challenge: Thresholds for income tax and NI remain frozen until 2028, causing pay rises to push many into higher tax brackets. This can also increase liabilities for dividends, capital gains, and reduce personal savings allowances.
• Solution: Maximise use of tax-efficient vehicles like ISAs and pensions to shield income and savings from additional tax.

2. Capital Gains Tax (CGT) on Investments

• Challenge: The new CGT rates for stocks and shares are now 18% for basic rate taxpayers and 24% for higher and additional rate taxpayers. Couples who previously relied on the lower earner’s tax rate will feel the pinch.
• Solution: Use stocks and shares ISAs to protect investments from CGT and ensure tax allowances are fully utilised within a household.

3. Stamp Duty

• Challenge: The temporary stamp duty holiday ends in March 2025, which could cause a short-term property rush followed by a market lull. Buyers may face higher property prices initially and increased tax post-holiday.
• Solution: If planning to buy property, aim to complete purchases before the holiday ends. For longer-term planning, consider how market fluctuations might impact timing and pricing.

4. Inheritance Tax (IHT)

• Challenge: Frozen thresholds until 2030 mean more estates will exceed the nil rate bands (£325,000 and £175,000), especially as property values rise.
• Solution: Start estate planning early. Use annual gift allowances and explore trusts or other mechanisms to reduce taxable estate value.

5. Council Tax

• Challenge: Councils can raise rates by up to 4.99% without a referendum, making increases highly likely.
• Solution: While there are limited ways to avoid council tax increases, review eligibility for discounts or exemptions (e.g., single occupancy, disability relief).

6. Sin Taxes on Alcohol and Cigarettes

• Challenge: Alcohol duty freeze ends in February, with cigarette prices likely to increase again in late 2025.
• Solution: Consider reducing consumption or exploring alternative products that may fall outside the taxed categories.

Five Ways to Cut Your Tax Bill in 2025

1. ISAs: Shelter up to £20,000 per year in a tax-free account, and consider Junior ISAs or LISAs for additional tax-efficient savings.
2. Pensions: Contribute up to £60,000 annually with tax relief. Even non-taxpayers can benefit from relief on contributions up to £3,600.
3. Salary Sacrifice: Leverage schemes for pensions, childcare, or tech to save on income tax and NI.
4. Spouse Exemptions: Transfer income-generating assets to take advantage of lower tax rates within a household.
5. Marriage Allowance: Transfer unused personal allowances between spouses for added savings if one is a non-taxpayer.

While 2025 presents a challenging tax landscape, early planning and strategic financial adjustments can help mitigate its impact.