Summer Budget 2015 – Landlords Reactions

Reply to the comment left by "Appalled Landlord" at "12/07/2015 - 02:02":

That's correct! Effects of this tax is yet to be felt and this may push medium to large landlords out of business once it comes in play particularly when interest rates are high and you are not making any surplus but you are left with thousands of £'s worth of tax to pay regardless of your tax position.

In essence this forthcoming tax is downplayed to avoid rush in market, although smaller landlords with small portfolio should be ok.

Reply to the comment left by "Appalled Landlord" at "12/07/2015 - 02:02":

Hi Appalled landlord

I am in a fortunate position where a lot of my properties are mortgage free. I was intending to increase this and expand. But due to this confusion I wont be doing anything until there is clear understanding of what the case is.

I would be far better reducing the amount of properties I own and therefore would be financially better of.

I cant not understand when the interest is a legitimate cost to BTL it can not be counted as a cost and deducted before the tax is calculated.

I will suffer dramatically in the future so will have to take a long hard look at my position on the way forward.

I think that some methodology and terminology used differs depending on who posts but I think net result is most get this now. Massive help. Thank you.
Basics of taxation is that tax must be simple and fair. This fails on both counts and normally results in people tweaking their affairs (lawfully) to avoid.
My biggest concern is now that interest is effectively not deducted as a true cost from 2020 but is rather something which 'tax relief' is given - then there is scope for the government to tinker further with as time (and political pressure) develops in the future.

Jason

Thank you so much for sharing your spreadsheet, I think it is excellent.

It took me a while to work out how to change the red input variable but then I spotted the "Open with" button at the top of the page and from thereon it was very easy and very insightful. I'm impressed that you have allowed for forecasting of property value, rent and tax allowance increases too.

Thank you so much for sharing.

For those who missed it, the link is >>> https://drive.google.com/file/d/0B4DRc1psaxK-MnQxYmtGNkJUcUk/view?usp=sharing
.

One point about whether property let by an individual is taxed like other businesses - remember that no National Insurance is due on any profits, in the way that it would be for, say, a plumber's sole trader business. In that way, it is treated more like an investment than a business.

Reply to the comment left by "Y L Newbury " at "08/07/2015 - 15:23":

Not sure I can feel sorry about that one, so what you are saying is we should be able to claim for costs we haven't had.

Reply to the comment left by "Neil Patterson" at "12/07/2015 - 10:32":

Neil, unfortunately, the calculation link you have sent is shows completely wrong calculation. The calculation I have showed earlier and metodology expalined by "Appalled Landlord" is correct .

You can not have £100k income with £42000 interest and pay nothing. The interest is added onto your total income and then you pay 40% tax and in the end of calculation you reclaim 20% tax..if your income exceeds £43000 which could also include interest only and no other income at all. Just remember, interest is now classed as Tax liability and added onto your income whether you are making profits or not.

Reply to the comment left by "Neil Patterson" at "12/07/2015 - 10:32":

Neil, unfortunately, the calculation link you have sent is shows completely wrong calculation. The calculation I have showed earlier and metodology expalined by "Appalled Landlord" is correct .

You can not have £100k income with £42000 interest and pay nothing. The interest is added onto your total income and then you pay 40% tax and in the end of calculation you reclaim 20% tax..if your income exceeds £43000 which could also include interest only and no other income at all. Just remember, interest is now classed as Tax liability and added onto your income whether you are making profits or not.

Whilst on this subject, I am not sure how this would be sustainable when interest rates return to normal level.

I hope Mr Chancellor does the U turn and does not make this tax change retrospective unless that's already been decided.

In other words, before this legislation kicks in, he should allow all properties bought previously to remain under old rules.

Reply to the comment left by "Neil Patterson" at "12/07/2015 - 10:32":

Hi Neil

The figures on the spreadsheet under New Tax System are identical to those under Old Tax System. If only!