Summer Budget 2015 – Landlords Reactions

Reply to the comment left by “Mark Alexander” at “14/07/2015 – 13:34“:

Mark,

“Failing to declare them would be madness though because the 20% tax relief would be lost.”

That’s the point I made to Monty, however he has found me unintentionally aggressive and patronising……:-)

Reply to the comment left by “syed shah” at “14/07/2015 – 12:48“:

Hi Syed
Thanks for posting this. We now have it from the horse’s mouth that it affects those who are currently paying basic rate tax: “If that means you become a higher rate taxpayer (or you were anyway) then you will have to pay more tax as a result of this change.”

In the example the tax goes from 14.7% of real income to 19%.

The rent in the example is what 1 or 2 properties would provide. It does not reflect what will happen to portfolio landlords.

Reply to the comment left by “Simon Dewsberry” at “14/07/2015 – 13:36“:

re credit cards….. moving a mortgage to a 0% credit card for a few years (with the great new limits you will now get as a Landlord) I jest not cc are falling over themselves to give 2-3yrs 0% deals and 50-100K limits are readily available over several cards if not just one ……

All with a hugely inflated income as designed and confirmed by hmrc to back new card applications

Reply to the comment left by “James dengel” at “14/07/2015 – 13:28“:

At 116K you will have lost most of you personal 0% tax allowance also if a family landlord rather than an individual then child benefit , working family tax credits & child tax credits will all be removed, any housing benefit or other help that is low income dependant will all dissappear as well …then of course you will have to pay tax on the money funds that you never had to start with .WTF.

I have done my own rough calculation and concluded my tax bill will DOUBLE as a result of these tax changes. The reason for the huge increase is that the abolition of wear and tear will propel me much higher into the higher rate of tax. When it is then combined with no longer being able to deduct mortgage interest at the higher rate, the two changes combined, have a kind of multiplier effect, causing a huge rise in my tax bill.
Let’s face it: as a political force, landlords have been pretty useless and we are being walked all over as a result. Every landlord needs to write to their MP. It’s not only about the changes which have been proposed so far. It’s also about all those additional unknowns that we may be clobbered with in future years.

Reply to the comment left by “Mark Alexander” at “14/07/2015 – 13:34“:

Isn’t that what this whole thread is about? That finance costs will no longer be fully relieved? To that extent they’re taxable, aren’t they? Of course I could quite easily have got the wrong end of the stick, this is very confusing !

Reply to the comment left by “Puzzler ” at “14/07/2015 – 14:26“:

No wonder you are called Puzzler….:-)

Reply to the comment left by “syed shah” at “14/07/2015 – 12:48“:

The increase in tax of £1,800 is 16.7% of the finance costs.

It is not 20% because under the current rules he does not even reach the top of the basic rate band.

Under the new rules he becomes a higher rate taxpayer. That will teach him for buying in his own name!

Another piece of today’s new by Bank Of England:

http://www.theguardian.com/business/2015/jul/14/interest-rate-hike-moving-closer-bank-of-england-governor-mark-carney

Interest rates will rise soon another drain of your finances…best time to fix your roof is whilst sun is shining!

—- Forwarded Message —–
From: “[email protected]”
To:Sent: Tuesday, 14 July 2015, 14:15
Subject: RE: Restricting finance cost relief for individual landlords —– Is this proposals only ?

xxx,
Many thanks for your email.
The legislation implementing this change will be published in tomorrow’s Finance Bill. The Bill is subject to parliamentary scrutiny and so there are no guarantees as to what will become law before the Bill receives Royal Assent in Autumn.
Thank you for your other email regarding your concerns on the policy. I have forwarded this to my policy partners in HM Treasury.

Megan Shaw
Product Owner – Property Income & REITs
HMRC, Room 3/64, 100 Parliament Street, London, SW1A 2BQ
03000 585628

From:
Sent: 14 July 2015 11:11
To: Shaw, Megan (CTIS)

Subject: Restricting finance cost relief for individual landlords —– Is this proposals only ?

Hi Megan,

My name is xxx , a BTL landlord. Just wanted to check if the new announcements in budges for restricting finance costs for landlords is this just in proposals stage or has become confirmed law ?
I am referring about removal of mortgage interest tax relief and below points from HMRC website

Restricting finance cost relief for individual landlords…

Landlords will be able to obtain relief as follows:

in 2017 to 2018 the deduction from property income (as is currently allowed) will be restricted to 75% of finance costs, with the remaining 25% being available as a basic rate tax reduction
in 2018 to 2019, 50% finance costs deduction and 50% given as a basic rate tax reduction
in 2019 to 2020, 25% finance costs deduction and 75% given as a basic rate tax reduction
from 2020 to 2021 all financing costs incurred by a landlord will be given as a basic rate tax reduction

regards