There will be an enormous leap in tax bills for private landlords when tax reforms kick into place.
Dr Ros Beck, a private landlord, has done research which shows that the tax bill could almost triple – and that landlords will be effectively paying at a tax rate of 67%.
Her calculations are said to have been independently verified.
From next month, private landlords will have their current ability to offset mortgage interest against tax gradually phased out by Section 24 of the Finance Act (no 2) Act 2015.
This legislation followed last year’s Spring Budget, the last to be introduced by then Chancellor George Osborne.
By April 2020, the change will be fully phased in and landlords will no longer be able to claim tax relief against their borrowing costs. Instead, they will be issued with a basic rate tax deduction.
The new tax regime will not just affect mortgage costs but other loans – for example, overdrafts and loans to buy furniture.
It will apply only to private landlords, and not to those operating in a company structure.
Dr Beck said of her latest number crunching: “I would now urge people to lobby both Philip Hammond and Gavin Barwell and show them this very clear table which provides incontrovertible evidence that Section 24 must go.”
She described Section 24 as the “unjust legislation that will make the UK housing crisis much worse”.
Many larger landlords will have tax bills nearing 100% and many will be forced either to sell or go bankrupt.
All these people have done is try and be self sufficent.
What a disgusting government that taxes hard working people into bankrupcy. They have pulled this one out of thin air with no regard given to the many experts who warned them it was a rediculous policy with major repercussions.
What is the point of giving xx millions to homelessness when this policy will increase homelessness to new heights.
They have painted landlords has the devil to get this policy throu with least opposition.
This policy is the start to many more policies targetting the lower /middle classes . They intend to tax us to death.
My accountant sent this today
Small and med enterprises are blamed for over half of the Uks tax gap. Hmrc bel 18.3bn is lost and that is why they want to move to quarterly reporting. Easy target and the likes of google amazon get away with a tax rate of what 1%
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Exactly this. It is all very well having an example that shows 67%, which is bad enough, but what of the 80/90/100% (or more) examples who are currently running perfectly viable, profitable, tax-paying businesses but who will now be wiped out, with inevitable consequences for their tenants? Even landlords not wiped out financially may face ludicrously unfair levels of tax, whilst others may just conclude it isn’t worth it. Why should we put in such effort/stress/risk for a tax rate of 67/60/55-whatever per cent? Creating circumstances where good, professional, conscientious landlords find it better to leave the market altogether is not good news for anybody involved. The government really need their heads testing.
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I know a landlord whose tax will more than triple, and leave her without enough to live on. You can find the details on page 12 of Dr Becks’s report, which you can get by googling The Ros Report:The Treasury, and then clicking on the blue button.
The increase in my friend’s income tax will amount to 60% of her income, so her tax rate will be 83%.
Section 24 breaks exactly the same Conservative manifesto pledge – ”We will commit to no increases in VAT, National Insurance contributions or Income Tax” – that dominated the media after Philip Hammond announced an increase in NIC of 1% of income.
Tory MPs have forced a re-think of the NIC increase, which one of them described as an unforced error. Caroline’s increase will be 60 times as big, but Tory MPs are silent about that.
S 24 forces landlords to evict tenants and make them homeless, for councils to put in “temporary” accommodation at greater cost. Homelessness is going to increase enormously. That is an unforced disaster.
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Slap in the face with a wet kipper for smaller Landlords with one or two properties, who are trying to provide for their retirement. This Government want big corporate Landlords to take centre stage. Shame on May & her ‘reformers’. We are facing yet another Government with a completely shambolic housing agenda.
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This ostrich Government has buried its head in the sand and will only do something when sky rocketing homelessness, mass evictions and massive rent rises creep up on it and kick it in the ass.
Same as the NHS – wait until things are in crisis and then do something about it. Just look at the misery of long waiting times, people on trolleys in A&E, etc.
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Park benches and space blankets are where landlords should now be investing – for all the rough sleepers that section 24 is guaranteed to produce.
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