The challenge to new tax rules for landlords has began. From next year, landlords will no longer be able to deduct the cost of their mortgage interest from their rental income when they calculate the profit on which to pay tax. It is likely that higher-rate tax payers will only receive 50 per cent of the relief that they currently get.
The campaign group ‘Axe the Tenant Tax’, led by private landlords Chris Cooper and Steve Bolton, is being represented by Omnia Strategy, led by Cherie Blair QC. They claim the change will distort market competition, increasing rents substantially and giving cash investors and corporate landlords an unfair advantage. They also assert that it is a bad tax policy that breaks Generally Accepted Accounting Principles (GAAP).
The landlords used a crowd-funding platform to raise around £180,000 to fund their legal campaign.
Should the curb on the amount of tax that landlords can claim back on their property investments go ahead, buying and renting out property could no longer be a viable for many buy to let landlords.
If you are a landlord with properties with significant mortgages or loans, you could soon see a major increase in the amount of income tax you are expected to pay. Contact Steve Govey or your usual Beavis Morgan Partner if you would like to explore your planning options in more detail.