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10:05 AM, 4th March 2024, About 2 months ago 34
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Chancellor Jeremy Hunt is expected to announce a £300 million tax crackdown on second-home owners who rent out their properties to tourists in the Budget, The Sunday Times reports.
He will scrap a series of tax breaks for landlords who use the furnished holiday lets (FHL) regime, which allows them to deduct the full cost of their mortgage interest payments from their rental income and pay lower capital gains tax when they sell.
Mr Hunt will claim that ending the FHL regime will help ease the housing crisis in popular destinations such as Cornwall and the Lake District, where local people struggle to find affordable homes as landlords convert to holiday lets to take advantage of the tax benefits.
The move is also part of the Chancellor’s bid to find the money to cut personal taxes by 2p, a pledge made by Prime Minister Rishi Sunak during the election campaign.
A source close to Mr Hunt said: “1p is affordable, 2p isn’t. We’re trying to make it, but we don’t know whether we can.”
The £300 million from scrapping the FHL regime will be added to the £500 million a year that Mr Hunt expects to raise from a new tax on vaping products.
The FHL regime requires landlords to make their properties available for at least 210 days a year and rent them out for at least 105 days a year, with each booking limited to 31 days.
According to TaxWatch, a think tank, a landlord earning £30,000 a year in rent from a property under the FHL regime can save £4,000 a year in income tax compared with a normal long-term let.
They can also reduce their capital gains tax bill by tens of thousands of pounds when they sell.
About 127,000 properties in the UK are registered under the FHL regime and Mr Hunt hopes that abolishing it will persuade landlords to sell or switch to long-term rentals, increasing the supply of housing for residents.
Ben Beadle, the chief executive of the National Residential Landlords Association, said: “The Chancellor needs to address the chronic shortage of long-term rentals by attracting new landlords to the market.
“Squeezing holiday lets is not the answer. He should follow the advice of the Institute for Fiscal Studies and reverse punitive tax hikes which have stifled the supply of the homes renters desperately need.”
He added: “Scrapping the stamp duty levy on the purchase of additional homes would see almost 900,000 new long-term homes to rent made available over the next 10 years.
“This would lead to a £10 billion boost to Treasury revenue as a result of increased income and corporation tax receipts.”
Dan Wilson Craw, the deputy chief executive of Generation Rent, said: “When the government cut tax relief for landlords to give first-time buyers a boost, they failed to do the same for holiday lets.
“That means that in Britain’s holiday hotspots, first-time buyers have been getting outbid not by landlords, but holiday let operators, while tenants have lost out to tourists.”
He adds: “The shortage of homes to live in has driven people away from the areas they grew up in.
“That’s why Generation Rent and thousands of our supporters, including renters who have been evicted to make way for holiday lets, have been campaigning for these tax perks to be scrapped.
“A fairer tax system for holiday homes would be a very positive step for the government to take, and we look forward to hearing more in the Budget.”
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The landlord vote - who gets it?
moneymanager
10:13 AM, 9th March 2024, About 2 months ago
Reply to the comment left by Jason Phillips at 06/03/2024 - 14:24
It's ugly statism, the deprivation of the utility of private property, we used to call it communism.
steve watt
12:58 PM, 9th March 2024, About 2 months ago
This should free up some space for migrants.
The mantra used to be: you will own nothing and be happy.
This will be replaced by: you will own nothing.
Frank Jennings
12:58 PM, 9th March 2024, About 2 months ago
Reply to the comment left by Neil Alphonso at 09/03/2024 - 09:50
Both the PRS and Holiday B&B or Air B&B are businesses. Look up the definition in a dictionary if you don't believe me. Look I've done it for you....
"The term business refers to an organization or enterprising entity engaged in commercial, industrial, or professional activities. The purpose of a business is to organize some sort of economic production of goods or services."
Providing homes for people to live in, is a "Service" and
"Services are essentially intangible activities which are separately identifiable and provide satisfaction of wants. Their purchase does not result in the ownership of anything physical."
Well you can check the definitions yourself and they will all say the same or similar.
The govenment and HMRC have decided that the PRS is not a business, but merely an investment, and therefore taxed differently.The same now goes for B&B etc. and this means they are all subject now to S24 and some 140 or more new legislations introduced over the last few years. So no mortgage interest tax relief (except 20%) and the RRB introduction soon to come, and the end of Section 21, so landlords can not gain control of their own property anymore without a very lengthy and expensive legal fight, and then maybe not, depending upon the judge!
However if you have rental property under a Ltd. Company, you can still claim 100% mortgage interest tax relief expenses. How can this be fair? It simply is not fair!
It's possible that the govenment will ensure the new rules and Section 24 will apply to property rental companies in the future. The govenment love the salami tactics of introducing unpopular legislation bit by bit, slice by slice, so it's possible that Property rental companies are next for the chop! Introduction of S24 for them too! Just watch and see! The excuse will be to level the playing field, between companies and the PRS, no doubt!
Time will tell but all landlords and tennants should be protesting at the attack on the rental sector, before the PRS is forced into extinction and rental properties disappear and tennants finally have nowhere to live!
GlanACC
20:57 PM, 9th March 2024, About 2 months ago
Reply to the comment left by Frank Jennings at 09/03/2024 - 12:58
Dictionaries may not be correct - the dictionary definition of a bannana refers to it as a fruit when it is fact a herb distantly related to ginger.
In the PRS we are playing by HMRCs rules and definitions