Summer Budget 2015 – Landlords Reactions

Reply to the comment left by “Melvin Edwards” at “21/07/2015 – 10:21“:

First number is rent rental profit (as per this year’s rules…..allowing 15k interest costs)….second number is based on rent received… (as per proposes changes for 2021…not allowing for interest costs)

Reply to the comment left by “Melvin Edwards” at “21/07/2015 – 10:18“:

20% of 17000 (approx) – rents minus personal allowance – is more than 20% of 7000 (approx) – rents minus interest minus personal allowance, surely?

Reply to the comment left by “Kathy Evans” at “21/07/2015 – 09:19“:

Hi

In simple terms (there are some exceptions) you’ll be taxable on your actual profit plus the cost of finance and then you’ll get the value of 20% of your finance costs deducted from your tax bill. Most have other costs which they can deduct so it’s not rental income (turnover) you are taxed on,

Jason

Reply to the comment left by “Melvin Edwards” at “21/07/2015 – 10:18“:

Your total tax is (excluding some exceptions due to the small print).

Actual profit from rental business +
your finance interest +
any other income.

Now work out your tax.

Now deduct 20% of your finance costs from that tax.

Because some (most?) people have large interest payments they soon find themselves pushed into the 40% rate and then they only get 20% knocked off the bill so they end up paying more tax.

Jason

I’ve been struggling to make sense of these changes – particularly the potential impact of going to Ltd company status. I couldn’t visualise the changes so I put a calculator together – I don’t know if it might be helpful to others, but I’ve put it online so feel free if you want to try it out (not sure how many there are out there now, but I couldn’t find one when I wanted one last week)

It isn’t ultra clever or anything (misses W&T allowance for a start) – but it has helped me see the impact on my income levels (harsh)

Anyway, feel free to have a look here: http://www.30onthe30.org/budget2015/

I’ve been struggling to make sense of these changes – particularly the potential impact of going to Ltd company status. I couldn’t visualise the changes so I put a calculator together – I don’t know if it might be helpful to others, but I’ve put it online so feel free if you want to try it out (not sure how many similar calculators there are out there now, but I couldn’t find one when I wanted one last week)

It isn’t ultra clever or anything (misses W&T allowance for a start) – but it has helped me see the impact on my income levels (harsh)

Anyway, feel free to have a look here: http://www.30onthe30th.org/budget2015/

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

Hi all

I just wanted to reply to old post from Syed as it contains the working example from Megan Shaw from HMRC who’s name was on the press release. As some people may be new to the thread it’s handy to have this one to hand so you can check how the calculations will be done (you can click on the date of the “Reply to the comment left by …” section at the top to see it).

Jason

Reply to the comment left by “Kathy Evans” at “21/07/2015 – 09:19“:

Kathy

Please go back and read earlier posts in this thread.
You do not pay tax on your turnover (gross rents).
You add the rental surplus of gross rents less allowable expenses to your other income for the year. You work out the tax payable on this income and then deduct 20% of the interest paid in respect of your rental income directly form this tax liability.
This is completely different from what you are saying. What you have put is misleading and wrong.
I agree that a large number of landlords who currently pay tax at 20% will move up into the 40% tax bracket. But the additional tax is not solely on thier turnover.

Mark , you may want to put this as a whole new thread !

10% wear and tear new replacement proposals – a few changes here too !

contact details Megan Shaw again ..busy Lady !

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/447125/150715_Wear_and_tear_condoc.pdf

Regarding the FTBs:

Real case:

A young couple with a 4 year old child. 3 good degrees between them, 1 works for NHS, the other runs a small IT business.

They have been given £30k as a deposit by a parent. On their income they can afford a mortgage….however they can’t afford to buy in the areas they want (good school etc). They have saved nothing…they have gone on holidays, they have bought sheets costing £100.

They are ‘desperately’ looking for a property to buy, but are not willing to accept living in an area they don’t like, or to save as they don’t see that it will help enough to make a difference.

Very different to when I started out on the property ladder.

I think it’s time we all (govt included) realised that the mind set of young people has changed, and maybe they are only ‘desperate’ to buy because us oldies are telling them they should.