Summer Budget 2015 – Landlords Reactions

Reply to the comment left by “James Leavesden” at “11/07/2015 – 11:05“:

Thanks for posting, this really helps and sets out the position.

So as I had interpreted although they say this is neutral position for 20% tax payers today, many will as a result of the proposed change become 40% tax payers and be impacted.

Reply to the comment left by “James Leavesden” at “11/07/2015 – 11:05“:

The article is clear and as far as I can see sets out thee situation as it appears at the moment.

However the reaction on this site is similar to the one I saw when the IR35 legisaltion about personal service companies was introduced. There is a lot of comment and speculation but unitl the actual legislation is published that is all it can be.

I agree with the comment in the article that the budget announcement refers to individuals. It may be that where there is more than one owner of a property the legislation will not bite. Specualtion – yes – but until the detail is made available we cannot say.

There will be tax planning opportunities which will present themselves as the situation becomes clear.

Untill we have the whole story, in the words of the book, DON’T PANIC.

There will be time to make the best of what appears to be a dire situation.

Reply to the comment left by “John Blackwood” at “08/07/2015 – 14:12“:

John,
I feel much better knowing that you are on the case, and take some small comfort from the fact that you will no doubt lead the charge with great vigour.

Reply to the comment left by “Jack D” at “11/07/2015 – 11:01“:

Jack, that seems to be the case now. This will encourage landlords to explore other avenues such as Deeds of Trust being introduced to utilise the tax allowances of family members such as adult children. This isn’t an area I’m familiar with at present and imagine it comes with its own set of problems but, according to the solicitor I’m using to purchase my latest property, it’s a viable option worth considering. Depends I guess who you stand to lose more from should your decision prove a wrong one. The tax man or your children! The devil is in the detail, trust.

Reply to the comment left by “Michelle O’Connor” at “11/07/2015 – 13:14“:

It will certainly make it more complicated.

I’ve always thought the rule that unmarried individuals that buy a property together can choose who pays the tax on what percentage whereas if you’re married it’s almost always (unless you elect and there are many hoops) based on the percentage of the property owned. Which is often 50/50 in normal situations.

I don’t understand why it’s far more flexible for unmarried folk. Probably to do with asset splits when divorcing or something.

It’s early days but while we wait for the dust to settle this is my LibraOffice spreadsheet of the interpretation of the new rules. If you put in some keys figures it should spit out the old and new tax. It’s the difference between the two figures that’s of interest. You can have a play with the interest rates as well. I’m not an accountant and you use at your own risk.

https://drive.google.com/file/d/0B4DRc1psaxK-MnQxYmtGNkJUcUk/view?usp=sharing

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

No because you are paying basic rate tax and that is the rate that the interest payments are relieved at.

Assuming, you are earning, 20k and paying £60k on mortgage interest payment (making no profits from rental) are you then pushed into higher tax bracket, therefore taxed on difference between 43k (basic rate) and £80k ie £37k at 40% and then reclaiming 20% therefore paying £7400?

So in other words does your gross interest get added to your income to determine whether or not you are Higher rate tax payer as opposed to rental profits?

I suspect it’s true with regard married couples assuming the 50/50 rule of thumb would apply. Ive looked at it from my perspective as the sole owner of the properties. Apparently I can be the legal owner at land registry but, via a Deed of Trust, can give whatever % to my children who would then become the beneficiaries and are entitled to the income equivalent to the % stated in the document. This could alleviate the problem posed from the new budget reforms but am yet to completely satisfy myself I can build in enough clauses, if any at all, that my ‘little darlings’ couldn’t hold me to ransom. Presumably so long as I retain the greater portion I would retain control. I’ll update this post once I’ve met with my solicitor.