Summer Budget 2015 – Landlords Reactions

Reply to the comment left by “Michael Barnes” at “14/07/2015 – 09:34“:

This is how it will work.

Earned Income from other employments: £35k (taxed at source- no further tax)

Rental Surplus after all expenses: £10000. (first £8000 taxed at 20% = £4000) remaining £2000 move to higher rate.

Mortgage Interest: £62000 plus £2000 = £64000 taxed at 40% = £25600.

You then reclaim 20% of £62000 = £12400.

Therefore £25600 – £12400 = £13200.

Not what you have explained, I think biggest danger is a lot of people are underestimating the impact this will have on landlords income, once it will come in play they will be in for massive shock. So please educate yourself or your risk losing your business.

A lot of people are sitting in comfort zone thinking as long as I keep my income less than higher rate tax band I’ll be fine but that’s simply not the case. Your finance cost will be added at the top of your any income and your finance cost pushes you over £43k then you are simply required to pay 40% tax and then minus 20%.

Once and if that, got implemented I can not see, once interest rates rise, any landlord with decent size portfolio will be able to sustain.

Lenders in fact may push rates up as they may consider, this a risky business or may start to pull out together and then institutional investors may come in and may takeover the whole market and leave, landlords high and dry.

The only person who seems to understand this “Appalled Landlord”. I’m sorry I don’t know you name.

I am amazed at how many landlords are oblivious to the impact of these changes.

Last night I spoke to two of my family members (both portfolio landlords) and they were blissfully unaware. Both said, we didn’t watch the budget!
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Reply to the comment left by “James Tallis” at “14/07/2015 – 09:50“:

James You are assuming that we are running the properties as a business to take a gain during the life of a business.

For many landlords the properties are used to supplement a pension.

So getting another 5K of a tax free allowance is a nice benefit.

Your model is done so you can pay yourself a wage, which should be paid under PAYE. so you have therefore structured it so you pay less tax.

Perhaps you need to consult an account who can run the figues agian and see if it is better to pay yourself a higher wage instead of the 33.5% (I suspect with income tax at 20% and then NI at roughtly 12.5 it might not be.)

Reply to the comment left by “Neil Robb” at “13/07/2015 – 17:38“:

Thanks for you reply Neil,

The thing is if this legislation does go through and it seem on the face of it more likely then not, Shouldn’t we be hoping for the best but planning for the worst and in a worst case situation like the scenario you put forward in your other post the more debt you have the more uncomfortable your situation will be?

It’s a good deal using today figures but post 20-21 what is a good deal?

Reply to the comment left by “Gary Mason” at “14/07/2015 – 10:00“:

I fear both you and Mark are right.

Many people will be unaware. The first they might notice is that there TAX bill grows.
However it comes over 4 years so some might not even notice if the issue is not explained to them by their accountants.

Reply to the comment left by “James dengel” at “14/07/2015 – 10:32“:

WE are off topic by talking about contractors, but were they not given a tax break in the form in no employers NI for business with less than four employees?
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Reply to the comment left by “James dengel” at “14/07/2015 – 10:34“:

They will notice, eventually, of that I am certain!
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Hmmm …earlier links to hmrc guidance as listed in theis discussion have been taken down …. is this a good sign ?!

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/443277/6041_Restricting_finance_cost_relief_for_individual_landlords__3_.pdf