Summer Budget 2015 – Landlords Reactions

Reply to the comment left by “Gary Nock” at “10/07/2015 – 21:59“:

I was on the Accounting Web website and there is an example by a noted accountant where illustration of before and after ( old and soon to be new). The “real ” rate of tax was 144% of tax in one of her examples. In that model, large rental, large amount of interest revised formula equalled profit X , tax was 144% of X. Her summation was business model unsustainable. It is going to come down to leverage ratios. I was about to construct a spreadsheet of interest %age to rental income to calculate a break even point. All that I have read so far is it ia case of come 2021 you can only deduct 20% of your interest. I hope I am wrong.

BTW Gary are you suggesting that come 2020, 80% of finance costs would still be deductible?

Reply to the comment left by “Asif Ahmed” at “10/07/2015 – 22:49“:

Asif, that’s exactly what I’ve been saying throughout this thread.

Reply to the comment left by “Asif Ahmed” at “10/07/2015 – 22:49“:

These are truly dark times for many. How many of us are thinking I should have just sat on my backside, do squat for myself and rely on the state to look after me.? I suppose we landlords are the mavericks of society. We didn’t stick our money into the casino aka the stock market only to be told “your money is gone” . So Osbourne is doing his spiv mates a favour by making an example of us. If its not a business then black s not black and white is not white. Investments once placed occasionally administered can be left . I spend hours everyday , weekends, evenings, holidays dealing with property issues. This is a lousy investment I bought. Should have just given my money over to Osbournes mates without being a smart a**** and thinking I don’t want to be a burden on the state. A friend of mine one prophetically commented this is one of the hardest countries to become wealthy. This is also one of the hardest countries to keep your head above water !

direct quote from the budget:

15. Restricting tax relief for wealthier landlords

Currently, individual landlords can deduct their costs – including mortgage interest – from their profits before they pay tax, giving them an advantage over other home buyers. Wealthier landlords receive tax relief at 40% and 45%. This tax relief will be restricted to 20% for all individuals by April 2020.

Dom, i think you have misinterpreted your accountants figures!
https://www.gov.uk/government/news/summer-budget-2015-key-announcements

same as before for std 20% rate payers, and an increase of 20/25% for high rate payers as they can no longer claim it in full. net result as i have posted before !

Reply to the comment left by “Simon Dewsberry” at “10/07/2015 – 23:46“:

Simon, I really, really hope you’re right. Nothing right now would give me greater pleasure than to look a total idiot on this forum. So, do you agree that come 2020 80% of finance will be deductible before any tax kicks in?

Reply to the comment left by “Simon Dewsberry” at “10/07/2015 – 23:46“:

I posted previously but the post seems to have disappeared!

My post was around fact that added to this scenario here, surely many landlords in the 20% tax bracket today are as a result of this change going to find themselves in the 40% tax bracket.

On basis that finance costs cannot now be considered as a deductible cost.

Reply to the comment left by “Dom Glynn” at “10/07/2015 – 23:54“:

If your mort int is 100k and you are a 40% tax payer then you will get 20% relief on it allowing you to deduct 20K from your TAX BILL (NOT 20k expenses from your profit) …up until this kicks in you would have deducted 40K from your tax bill (NOT your profit) so your tax bill will be 20% (of mort int) or 20K higher than it used to be in this case.

Terms that are causing all the confusion are all getting mixed up on here !!! : tax relief, tax deductable expense, taxable amt, tax due

Reply to the comment left by “Simon Dewsberry” at “11/07/2015 – 00:07“:

So Simon, and forgive me for being hard work on this, are you saying that my accountant, and many others in working out my tax, never actually deducted all of the the mortgage interest from the rental income? But instead deducted 40% of the interest bill
( when I was a higher rate taxpayer) before they calculated my profit?

Reply to the comment left by “Gary Nock” at “11/07/2015 – 00:23“:

Sorry should read “before they calculated my tax bill”