Summer Budget 2015 – Landlords Reactions

OH DEAR!!!

Has anybody else spotted that Mr Chilvers (case study in The Telegraph today) has made several errors in his calculations?

I have advised Richard Dyson because he’s also linked to Mr Chilvers online calculator (yikes!).

Richard has acknowledged this and will make amendments to the online copy.
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I have just posted the following comment on The Telegraph article ….

Dear Mr Chilvers,

I hope you are reading these comments. I have been a landlord for 26 years, I also work as a Consultant for three solicitors practices, one barristers chambers and chartered accountancy firm specialising in property taxation.

Whilst the prognosis for your business is dire as a result of this tax, sadly you have misunderstood some elements of the tax proposals, hence your numbers are wrong. I have advised Richard Dyson, the author of this article. I have not checked your online calculator but under the circumstances I also suspect the logic in that will be equally flawed.

You have made the classic mistake of thinking you will pay more tax as interest rates go up. Whilst higher rates will reduce your profit, you will will get more tax “relief” on the increased expense. Therefore, you will pay LESS tax but will still be much worse off overall in terms of cashflow due to paying higher interest rates. It is similar to your insurance premiums increasing. Your expenses will increase, hence your profit will reduce. The outcome will be that you will pay less tax but the increased expenses will be significantly greater than the tax you will have saved, hence you will still be worse off.

If the chancellor wishes to level the playing field he would need to charge a flat rate of 20% tax on retained rental profits for individual landlords, as he does for corporate landlords.

I have written three letters to my MP to help him to understand the true effects of this taxation policy. I am also meeting him on 2nd October. You can read these letters via this link >>> https://www.property118.com/category/open-letter-to-mp/

I was also invited to consult with The Treasury last month and met with Sean Rath (Policy Adviser) and Megan Shaw (HMRC Project Director). If ever I felt like King Canute trying to stop the tide coming in, this meeting was it!

I may be able to help you though, please see >>> https://www.property118.com/tax-efficient-incorporation-landlords/77519/
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Manchester Landlords posted details of the tax treatment for landlords in Ireland a few days ago. I have done some further research on this and have found the following articles:

http://blog.myhome.ie/2013/01/22/landlords-welcome-deductible-property-tax/

http://blog.myhome.ie/2013/01/21/property-tax-may-be-able-to-be-deducted-from-tax-returns/

http://blog.myhome.ie/2013/12/13/irish-landlords-amongst-the-highest-taxed-in-the-eu/

http://blog.myhome.ie/2013/08/22/rent-rises-down-to-a-taxsault-on-landlords-say-ipoa/

Would a non-principal private residence tax ( set at a modest rate, paid locally but tax deductible) be a possible alternative to put forward to GO? There are pros and cons I suppose. If it applied to all non-principal private residences it would impact on all landlords, holiday let businesses and all property companies but could potentially make a bigger contribution to the Government’s policy objective. The funds raised locally could be ring fenced for the delivery of affordable housing, thus helping to address the country’s housing need.

Reply to the comment left by “Mark Alexander” at “06/09/2015 – 10:03“:

Mark please enlighten us as I cannot see the mistake(s).

Richard Dyson has asked us to flag any personal, racist or abusive comments so that they can be removed and so that the authors can be banned from posting further comments.

I have just flagged one calling me a “parasite”.
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Reply to the comment left by “David Price” at “06/09/2015 – 11:22“:

His tax will not increase as interest rates rise. In fact, his tax will reduce but his cashflow will worsen. Please read my recent comments on this thread.
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Reply to the comment left by “Mark Alexander” at “06/09/2015 – 11:33“:

That is what is reported in the Guardian examples. As interest rates rise the tax liability goes down by £400 but the profit goes to zero. His figures may be approximations but I believe he has established the principle of the tax. Please enlighten if I am wrong?

Reply to the comment left by “David Price” at “06/09/2015 – 12:18“:

We are referring to the article in The Telegraph today – see >>> http://www.telegraph.co.uk/finance/personalfinance/investing/buy-to-let/11844499/I-own-75-buy-to-let-properties-but-I-havent-deprived-other-buyers.html
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Reply to the comment left by “Mark Alexander” at “06/09/2015 – 11:28“:

There is a particular poster on there who has far too much time on their hands.

Reply to the comment left by “Claire Oswald” at “06/09/2015 – 12:52“:

That would be me then? LOL
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