Summer Budget 2015 – Landlords Reactions

I also think that if we are to be treated exactly the same as owner-occupiers how can they charge us CGT? The assumption is that they are trying to encourage a ‘level playing field’ at the point of purchase, and while the mortgage is being paid, but then not at the point when it is sold? I have thought of writing a list of the contradictions inherent in the policy, but haven’t got around to it yet.

16-17 20-21
Rental income 260k 260k
Exps 80k 80k
Int 80k 0
Net Rental Profit 100k 1800k
Personal allowance 22k 0

Taxable income 78k 180k
basic rate(x2) 15600 17200
40% 0 34328
45% 0 0
51528
Less 20% relief (16k)
net tax liability 15600 35528

I am no accountant but that is what i make it Ros

Tax increase 0 72200
effective rate on “real” profit 11.2% 147.4%

Reply to the comment left by “Simon Roads” at “20/07/2015 – 19:07“:

last 2 lines :

Tax increase 0 19928
effective rate on “real” profit 15.6% 35.5% …get a real accountant to confirm these figs tho !

Reply to the comment left by “Simon Roads” at “20/07/2015 – 19:07“:

This is such a good example I’ve used it as the basis of an article for tomorrows Newsletter >>> https://www.property118.com/how-the-budget-will-affect-private-landlords-example/76673/
.

Reply to the comment left by “Mark Alexander” at “20/07/2015 – 19:10“:

Mark
Not overlooking the fact that Megan Shaws eg is also unsustainable unless you want to work for free/take huge risks and have a bill at the end of every year

Reply to the comment left by “Simon Lever” at “20/07/2015 – 11:01“:

Hi Simon,

You are absolutely right. We must be factually correct so that we don’t give any opportunity for trite answers to be given when we hold the moral high ground here.

I asked on here initially on 13/07/2015 for help in the wording “I can put one together myself of course but whilst keeping it succinct I don’t want to miss anything out and I’m sure someone else would make a better job of it than I would – It’s so important we get it right “.

The fact is, although I get the gist of the changes in the allowances I would be the first to admit that I am not confident in the details, but short of doing nothing for fear of getting it wrong . . . .

Thanks Simon.
In plain English, does that mean £20,000 ish extra to pay on the joint income from the portfolio each year? (I thought it was about £40,000 extra – so I don’t know my a from my e). I will have to get an accountant. (I believe there’s a little error – an extra ‘0’ in your worked example -see if you can spot the typo – just so that Mark doesn’t have it in the newsletter)
Mark, you may want to add that the portfolio value is about 4 million (until the inevitable house price crash that this policy will cause) and the mortgage debt is about 3 million. Each 1% increase in the base rate means an extra 30,000 pa in my outgoings (which will then also be taxed!)

Reply to the comment left by “Phil Landlord” at “20/07/2015 – 18:45“:

Phil,debt will, as you have pointed out, depend on int rate paid

1% £35m
2% £17.5m
3% £11.66m
4% £8.75m
5% £7m
6% £5.8m

Reducing that kinda of debt quickly was never part of the plan, and withthat businees model is not possible, other than selling off some to finance others as long as thereis enough equity within the portfolio after cgt to make even that viable. A challenge for all of us if this does go live.

Reply to the comment left by “Ros .” at “20/07/2015 – 19:34“:

yes 180K not 1800K !!!

Reply to the comment left by “Ros .” at “20/07/2015 – 19:34“:

How good am i to you …i just cut your problem in half ! lol