Almost half a million landlords will end up paying more tax due to the scaling back of mortgage interest relief introduced by former Chancellor George Osborne, according to a survey.
The National Landlord Association’s latest panel found 22% said they would be pushed into the higher tax bracket once planned taxation changes are phased in from April 2017 meaning mortgage interest payments or any other finance-related costs can no longer be deducted from turnover.
Assuming 2million landlords in the UK, 22% would mean that 440,000 are now preparing for a higher tax bill.
Richard Lambert, chief executive of the NLA, said this showed the government was speaking “complete tosh” when it said only a small number of landlords would be affected by the changes.
The NLA says it has met with housing minister Gavin Barwell and is also due to raise its concerns with the Financial Secretary to the Treasury, Jane Ellison.
Lambert said: “When the Government announced these changes last year, it claimed they would only hit a small proportion of higher-rate tax payers. We now know that is complete tosh.
“The Government must look to amend these tax changes and minimise the impact on landlords and their tenants – something that could easily be achieved by applying the rules to only new loans written after April 2017.
“Unless this happens, landlords will face an impossible decision of whether to increase rents and cause misery for their tenants, or to sell up and force their tenants to find a new home.”
| Region | Will move up a tax bracket
(from basic to higher rate) |
| East England | 30% |
| East Midlands | 22% |
| London (central) | 31% |
| London (outer) | 24% |
| North East | 24% |
| North West | 19% |
| Scotland | 13% |
| South East | 25% |
| South West | 23% |
| Wales | 23% |
| West Midlands | 28% |
| Yorkshire & Humber | 24% |
Property is an easy target for government to tax.
Even now promises of collective crowd owned portfolio tax loopholes will likely turn into a latter group tax situation.
Landlords are being aligned like sheep. Sheep dog, pen then comes shearing or slaughter.
Landlords need to progress with caution, but equally accept good past returns could come with later troughs.
Equally a reduction in property prices would help FTBs
On the flip side, the government could be strategically running a few years plan to align some rental types for grabbing to replace council housing they’ve neglected to engineer.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
I agree with Richard Lambert Government do speak “complete tosh”
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
It claimed they would only hit a small proportion of higher-rate tax payers. Wouldn’t have been much point in doing then. Government told porkies how very surprising.
Trevor, I do feel you are crediting the government with a level of foresight and strategic planning that they have never displayed in the past. Don’t give them ideas.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
For goodness sake, a massive percentage of landlords don’t declare it anyway. I took my daughter to view properties in the Camden area for Uni. Nearly all of the properties had mail addressed to the landlord even after having let it out for years.
The reason….so they stay on the electoral role and address show at the property that was bought using a residential mortgage for BTL
it,s about time they clamped down. Lenders should have to submit to HMRC every BTL mortgage and everyone with 2 mortgages should also be submit to HMRC
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Don’t get Robert started on this.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
If only a fifth of landlords think their tax bills are likely to increase under the new mortgage interest relief regime, then one must assume that the remaining four fifths have not yet woken up to the effect of these changes. Either that or a very significant number have only one investment property and are in the lower taxation band, which seems highly implausible, or they simply do not declare their rental earnings at all, believe they are below HMRC’s radar and hope they won’t be found out. My expectation that almost ALL landlords will end up paying more tax, if, of course, they pay tax in the first place!
I have run the numbers on my properties already and know what kind of a hit I can expect. In consequence, some are up for sale or have been sold and I’m paying down mortgages on the few I wish to keep. When will politicians learn to stop interfering with the PRS?
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register