Peter Jackson

Registered with Property118.com
Thursday 18th June 2015


Latest Comments

Total Number of Property118 Comments: 5

Peter Jackson

13:39 PM, 2nd May 2017
About 3 years ago

Joseph Rowntree Foundation report on PRS lessons from Ireland - A landlord's perspective

Reply to the comment left by "James Fraser" at "30/04/2017 - 14:10":

Yes they are going for companies, specifically private service companies. They have already started having removed the eligability of single director/employee companies from the employers allowance against NICs last year. It's not aimed against landlords though we might take collateral damage.
For the moment though my company is small enough that I can take all the profits out as a directors pension tax free.

Schedule A was a tax on land and buildings
Schedule B was a tax on farming profits
Schedule C covered income from public securities
Schedule D had various sub- categories but basically was a tax on profits
Schedule E taxed income from offices and employment
Schedule F was a late addition being a tax on dividends.

Farms were gradually moved to Schedule D in the 1940s and when Schedule B was abolished in 1988 it only applied to woodlands.... Read More

Peter Jackson

13:49 PM, 30th April 2017
About 3 years ago

Joseph Rowntree Foundation report on PRS lessons from Ireland - A landlord's perspective

Reply to the comment left by "James Fraser" at "30/04/2017 - 11:25":

I concentrated my research on income tax on residential properties, so did not spend much time on schedule B - commercial occupation of land... Read More

Peter Jackson

13:10 PM, 30th April 2017
About 3 years ago

Joseph Rowntree Foundation report on PRS lessons from Ireland - A landlord's perspective

Reply to the comment left by "Dr Rosalind Beck" at "30/04/2017 - 07:44":

The first system was logical for its time, but given the current size of HMRC and the existance of computers the greater fairness of the second system makes it better. I have already said that I think the new system is unfair to some landlords.

Would I say it was absurd? No for two reasons. First the tax system has many absurdities, and secondly I doubt it will convince anyone it needs changing.

As for unsubstainable, it will force new rental lanlards who want to expand to work differently, but not stop them completely. I, for instance, was buying the property that put my rental income minus allowable expenses at just below the HRT threshold when C24 was announced. So I formed a company for buying further properties. I was a bit lucky with the timing.... Read More

Peter Jackson

0:47 AM, 30th April 2017
About 3 years ago

Joseph Rowntree Foundation report on PRS lessons from Ireland - A landlord's perspective

The institute was wrong about the history. When I first heard the claim (from a different source) I knew it was wrong though all I knew was that income tax had first been introduced during the Napoleonic wars, then abolished to be reintroduced later. So I did some research

As for S24 being absurd it is in many ways not as bad as the pre 1963 system. I can't really make myself clear without discussing that.

The income tax system introduced in 1842 was basically a copy of the previous one. Income was treated differently according to its source, being assigned to various schedules. Rents from property were in Schedule A, income from business were in schedule D. Under schedule A income tax was charged on the market rent of property owned even if if the property was not let. So owner occupiers would be paying income tax on their own homes. No allowances were given. The system was designed to be simple but effective as the civil service was very small so could not handle a more complex system. Three things stopped it from being unworkable: few people were property owners; the tax rate was low (generally under 10%), and the equivalent of todays personnal allowance.

Apart from a bit of tinkering this system remained largely in place until 1963. Certain types of property were removed from schedule A, such as mines and railways, and an allowance for repairs was made (typically 1/6th of the rent).

Rent controls were introduced in WW1 and the income tax rate started to rise. Since the rents were held down the burden of schedule A taxation did not become too much of a problem despite the higher rates, until the number of home owners started to rise.

In 1963 residential housing was removed from schefule A, so people did not have to pay income tax on their own homes, and residential lettings were moved to schedule D, which meant they were treated as businesses and paid income tax on profit, after expenses.

Most of the schedules have now been abolished though I believe vestiges of schedule A and D still exist for commercial property.

So charging people income tax on rental income rather than profit has an historical precedent. S24 does not break some great principle of the tax system. (The system seems rather unprincipled to me,) However whilst the old system was justifiable in the early days due to its simplicity and the small size of the civil service, S24 does not have that excuse. The reforms made in 1963 seem both sensible and fair. S24 is not fair becuase it affect some landlords who had arranged their affairs in an entirely legal and honest way extremely badly.

If you want to object to S24 on historical grounds you could say it is going back to a way of taxing rental income introduced to fight Napoleon that was rightly abolished over 50 years ago.... Read More

Peter Jackson

13:15 PM, 29th April 2017
About 3 years ago

Joseph Rowntree Foundation report on PRS lessons from Ireland - A landlord's perspective

"Being able to deduct finance costs to arrive at profit is not an incentive. It was a central tenet of tax law for centuries until it was removed this month"

No, it wasn't. Your argument would be stronger if your facts were right. For a start we have only had income tax in the UK since 1842 (apart from a couple of short periods earlier that century). Secondly most landlords have only been treated as businesses and thus been able to deduct finance costs since 1963.... Read More