Summer Budget 2015 – Landlords Reactions

Reply to the comment left by “Simon Lever” at “21/07/2015 – 13:27“:

Hi

Yes, this was Megan’s example and Syed who posted this mentioned about child benefit and she said she would pass this on the appropriate department.

I would hope that at least one of the concession would be they start talking about “taxable income” (as written in Megan example) and “actual income”. Taxable Income would be what our tax is worked out against while Actual Income is what is used in any benefits calculation. However I can see those quoted costs to the change in the IT system going up if that’s the case as it all started getting a bit complicated!

Jason

I have contacted the NLA (I am a member) to ask them what they are doing, and it appears, quite a lot…. Here is the reponse I received this morning…

Dear Ian,

Thank you for your email.

The NLA have been lobbying on this issue for quite some time. You may have seen our open letter to the Chancellor http://www.landlords.org.uk/news-campaigns/news/nla-issues-warning-over-mortgage-interest-payments for example.

We have been quick to react in the media against these plans (http://www.landlords.org.uk/news-campaigns/news/it%E2%80%99s-not-landlords-the-chancellor-has-screwed-it%E2%80%99s-tenants ) and are currently considering our lobbying response.

Please stay tuned to NLA Focus and your emails as we will shortly be asking members to write to MPs and/or the Chancellor and other asks. The reason we are taking our time is that a) its soon to be recess b) the summer is not a great time to lobby MPs b) we want to build a coalition of supporters / key stakeholders. For example have recently been meeting mortgage lenders to show the government what the unintended consequences of the policy is likely to be.

The four years of phasing and the six years notice until the proposals fully kick in indicate a degree of flexibility in the Chancellors plans. Given this and that there are two Autumn Statements and one Budget before 1 April 2017 so we are hopeful that we can lobby to mitigate some of the effects of these changes on our members.

I hope this reassures you we are on the case.

Kind Regards,

Matthew Oliver | Public Affairs Officer
National Landlords Association

T: 020 7840 8908 W: landlords.org.uk

Reply to the comment left by “Simon Lever” at “21/07/2015 – 13:27“:

I’d fall into this meaning i’d be effectively be taxed thrice on the same income.

Slowly I am seeing this for what it is – a giant con trick which would be worthy of Gordon Browns raid on pensions. My accountant has rung me today. Her companies understanding is that the mortgage interest is excluded from the profit calculation. So if you take £50,000 in rents and have mortgage interest of £25,000 and other costs of £25,000 (so nil profit) then your income from property is now classed as £25000 and taxed at 40% if you hit that band so
£10, 000. But the nice taxman allows you 20% tax relief on the interest so £5000. But he still gets £5000 in tax on a profit that does not exist. Tell me its not real and I am having a bad dream.

Reply to the comment left by “Gary Nock” at “21/07/2015 – 15:04“:

If you were just on the threshold of paying 40% tax with your other income that’s pretty much it. If you had no other income then there would be no extra tax to pay. Then there are various levels of other income and tax to pay in between those two examples (excluding additional possible issues of loosing child tax credits, etc etc) .

Jason

Reply to the comment left by “Gary Nock” at “21/07/2015 – 15:04“:

Sorry Gary, it’s real
.

The people who are scrutinising the current Finance Bill on its way through parliament are the Treasury Committee. There is a meeting today to discuss the contents of the bill.
http://www.parliament.uk/business/committees/committees-a-z/commons-select/treasury-committee/inquiries1/parliament-2015/summer-budget-2015/
There is no next meeting scheduled at present as the House will not sit again until 7 September 2015.
If you follow the lonk you can see who is at today’s meeting. I would suggest that these are the people to whom representations should be made about changes to the bill.

Reply to the comment left by “Simon Lever” at “21/07/2015 – 11:33“:

Sorry. I have read every post in this thread

I was talking about 2016 as against 2021. in 2016 I pay tax on gross rents minus other expenses and interest payments leaving about 7000 to pay tax on after person allowance.

In 2021 I will pay tax on rents minus other expenses – about 16000 (forgot rise in personal allowance) and get 20% of interest back.

Ignoring rise in personal allowance (as that would probably have happened anyway), that still means paying tax on an amount equivalent to 80% of the interest amount that I wouldn’t have paid before as the interest is no longer deducted from the rents. So it still looks like a rise for standard rate tax payers – not as dramatic as for those who get pushed into the 40% bracket, but still a rise.

If that’s not right.please would someone provide a worked example for a standard rate tax payer showing what the correct result is.

Thanks

My rents are my only income

Reply to the comment left by “Simon Lever” at “21/07/2015 – 15:55“:

That is very interesting Simon.

TO ALL

What we really need now is a page which has all of the contact details of all of the key influencers that we should be lobbying.

I too busy moderating, publishing new articles and dealing with our share sale in Property118 Portal Ltd to be able to take on this task as well unfortunately 🙁

ANY TAKERS?
.

Reply to the comment left by “Kathy Evans” at “21/07/2015 – 16:25“:

Hi Kathy

I will try to help.

I have to make assumptions but you can change things to suit your circumstances.

Assume Rents are £30,600 per annum
Other expenses are £4,000 per annum
Interest £9,000 per annum (£16,000 – £7,000 in your post)

Currently your rental account looks like this:

Rent £30,600
Less expenses £4,000
Less, Interest £9,000
Rental Surplus £17,600
Less Personal allowance £10,600
Taxable rental income £7,000

Tax due at 20% £1,400.

From what you have said in your post it does not appear that you have any other income to use up yor personal allowances.

Assuming the figures stay the same to 2020/21 and the allowances are the same as well your rental account in 2020/21 will look like this:

Rent £30,600
Less expenses £4,000
Rental Surplus £26,600
Less Personal allowance £10,600
Taxable rental income £16,000

Tax due at 20% £3,200
Tax relief on interest at 20% (£9,000 x 20%) £1,800
Net tax due for the year £1,400.

Therefore if you remain wholly a basic rate taxpayer you will pay the same amount of tax as currently.

Hope this helps.