Judicial Review – Landlord Tax Grab

Judicial Review – Landlord Tax Grab

1:00 AM, 26th December 2015, About 8 years ago 280

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Landlord Tax – George Osborne Policy To Face Judicial Review.

Private Buy-to-Let housing providers have chosen Boxing Day 2015 to begin their fight back at Chancellor George Osborne and his discriminatory tax regime, announced in the Summer Budget, which only targets private landlords with mortgages via the Judicial Review process.

New tax rules will treat mortgage interest as though it is earned income and push many rental property owners into higher tax brackets. Knock on effects can also include increased CSA payments and removal of other vital benefits but Osborne’s tax measures will not affect the wealthiest landlords (those with no mortgages), or indeed limited liability companies which borrow money to fund buy-to-let property investment portfolios.

Social Media has been buzzing in recent weeks calling for legal action to be considered.

The first step to instigating a Judicial Review is to obtain a detailed Legal Opinion from specialist legal counsel. Omnia Strategy LLP, established in 2011 by Cherie Blair CBE, QC, has been appointed.

The organisers of the campaign have launched a fund-raising appeal via the Crowd Justice website. Thousands of landlords are expected to donate funds.

Letting Agents and Mortgage Brokers are also being encouraged to contribute to the fund raising campaign. This is because their businesses are likely to be hit too if landlords stop investing or choose to sell up.

A member of ICAEW commented;

It is a long established principle of taxation that expenses incurred wholly and exclusively for the purposes of the business are deductible when calculating the taxable profits. Clause 24 of the Summer 2015 Finance Bill contravenes that principle and will result in proprietors of property businesses being liable to tax on a fictitious profit – even if the proprietors really make a loss.

The tax change does not just affect new borrowings. Landlords with existing borrowings will be affected. Portfolio landlords will be particularly badly hit.

As a consequence of the tax change, major changes in the private sector will take place. Some landlords will pass on their increased tax by increasing rents. Others will be forced to sell, as they will not be in a position to pay the extra tax demanded by HMRC. Homelessness will increase as some tenants will not be able to afford higher rents and many will be evicted by landlords forced to sell”.

Mark Alexander, founder of the Property118 Landlords Forum said “it is important for the whole country that funding is raised to win this legal battle. Millions of Britons simply do not qualify for mortgages to be able to purchase a home of their own. The number of people seeking to rent privately has been increasing in line with the growth of the population for decades. It is all very well the government having an ambition for everybody to be a homeowner but they must be made to realise that isn’t realistic. The UK has an ever growing reliance on the Private Rented Sector. Investment and building needs to be encouraged, not taxed into oblivion”

In a letter to the Chancellor, Conservative Lord Flight saidA lot of Buy to Let investment has been an alternative to saving for old age via pension schemes.  Up until World War II investing in rented property was the main method of providing for an income in old age.  Given the poor performance of the Stock Market over the last 20 years, it is hardly surprising that many people have opted for Buy to Let investment as an alternative source of retirement provisioning.  But Buy to Let does not enjoy any of the major tax advantages of pension saving, i.e. tax credit on the amount invested and accumulation of income and capital gains tax free within the pension scheme.  The only Buy to Let “tax advantage” has been the ability of the interest cost to be offset against an individual’s income to determine their tax rates/bill – the very thing which you have attacked.”

When Lord Flight referred to offsetting the interest cost against an individual’s income he of course meant rental income only, not total income.  Buy-to-Let interest is not deducted from any other income that a landlord might have – unlike the way MIRAS used to work.

Nor can Buy-to-Let losses be set off against any other income.  A BTL property has to pay its own way.  If it gives rise to a loss, the owner has to make good the loss out of other taxed income.  Landlords do not receive any tax “breaks”.

BTL has increased housing stock by 2.5 million between 1996 and 2013.

BTL was only responsible for one-twentieth of the 150% price increase between 1996 and 2007, which is insignificant.  Prices would have gone up even more if BTL had not financed the 2.5 million increase in supply – and so would homelessness.

Deducting finance costs from rental income is not a tax relief it is normal accounting practice everywhere, and for every business. That is why Lord Flight put “tax advantage” in inverted commas.

Disallowing finance costs for existing rental businesses is iniquitous and will be damaging for the economy.  Rents will rise.  Tenants who cannot afford the rises will be made homeless, to be put in temporary accommodation in whichever part of the country it can be found, at greater cost.

For these reasons, it is vital for private landlords, tenants and the entire rental sector that this funding campaign is successful.

The window of opportunity to submit an application for Judicial Review closes on 17th February 2016.

The Crowdfunding website page for making donations to the legal action fund can be found via a Google search for “Crowd Justice Judicial Review of Clause 24” or CLICK HERE.

Further information link


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Gary Dully

12:07 PM, 26th December 2015, About 8 years ago

Pledged and happy to do so!

Well Done everybody !

Clause 24 is discrimination plain and simple - Our business is not an investment vehicle it is a business just like any other in the UK and deserves to be treated as such.

Dr Monty Drawbridge

12:28 PM, 26th December 2015, About 8 years ago

Pledged. And happy to do so again once the advice is in.

Well done and thank you Steve, Chris and Mark.

And well done everyone who has pulled together to hit the target (almost) in a matter of hours!

Lastly, shame on the NLA and RLA for being so toothless. It's almost as if they have been lobbied from within by the corporates.

Steve Bolton

12:39 PM, 26th December 2015, About 8 years ago

We are £1,500 short of the first target. Please give it a big push for the next 30 mins. It would be brilliant to be able to report to media....

We raised £15k on a Boxing Day campaign that launched at 1am in under 12 hours and was supported by more than 200 people.

Let's smash it together!!

Carol Thomas

12:52 PM, 26th December 2015, About 8 years ago

Pledged and good luck everyone! Here's to a happy and successful New Year for us all.

Jonathan Clarke

13:01 PM, 26th December 2015, About 8 years ago

My £250 is in the hat

Thanks to all those who have instigated this very welcomed and inspired campaign and also to all those who are currently working their socks off in the engine room behind the scenes to maintain this impressive momentum.

Lets get our collective claws into Clause 24

The Man From Nowhere

13:14 PM, 26th December 2015, About 8 years ago

Pledged. Initial target surpassed.

Sudy Trivedi

13:21 PM, 26th December 2015, About 8 years ago

Great Read this morning.
It's time to hit these guys in the kisser
I have shared this with all my friends and family who are all going to be affected by this ludicrous and mad tax grab by GO
Thx for taking the time to send this out and hope you have a great time in Russia
Have pledged as well.

Steve Bolton

13:22 PM, 26th December 2015, About 8 years ago

Phase one complete! Nearly 200 people on Boxing Day with a 1am launch made this happen!!! Thanks to everyone - let's keep it going for phase two


13:37 PM, 26th December 2015, About 8 years ago

Have just emailed 20 letting and estate agents asking them to support

James Green

13:51 PM, 26th December 2015, About 8 years ago

Pledged and thank you for taking some action against the ludicrous clause 24.
Merry Christmas everyone!

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