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10:56 AM, 20th January 2023, About A year ago 28
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A bid by a landlord to get the Government to reinstate tax relief allowing mortgage interest to be set against rental income has been shot down after the petition reached 28,000 signatures.
Simon Foster started the petition on the Government website to reinstate the full amount of mortgage interest against rental income before tax is calculated.
He told Property118: “This is a typical response from the government, and it makes me laugh when they say that they want to ensure tax is fair.
“Because it is landlords who have been screwed over the last few years making it tougher for all of us.”
He added: “It surprises me because there are probably loads of MPs with homes to rent and AirBnBs.
“A lot of landlords will be impacted by not offsetting their interest – if other businesses can, why can’t landlords?
“We need to keep on going and hopefully reach 100,000 signatures.”
However, HM Treasury has posted this response on the site:
The Government will continue to set mortgage interest relief against rental income at the basic rate of tax. The Government has a responsibility to make sure the income tax system is fair.
The Government recognises that the private rented sector plays an important role in the UK housing market and economy. However, the Government also has a responsibility to make sure that the income tax system is fair. Under the old system, residential landlords got relief on their finance costs (including mortgage interest payments) at their marginal rate of income tax, which meant that higher rate taxpayers got a more generous tax relief than those on lower incomes.
To address this, and make sure that all residential landlords are treated the same by the income tax system, the Government phased in a set of reforms to restrict finance cost relief to the equivalent of the basic rate of income tax. The reforms mean that all residential landlords will now receive the same amount of relief. It also reduces the disparity in income tax treatment between homeowners and landlords.
To minimise the impact on landlords who are affected, the Government chose to act in a proportionate and gradual way. It announced this change almost two years before its implementation. The restriction, introduced in April 2017, was phased in over four years to give landlords time to adjust to the changes.
To be clear, these reforms do not mean that tax relief on mortgage interest has been abolished. Landlords are still able to claim an income tax reduction equivalent to basic rate tax relief on the finance costs of their rental property. Residential landlords also continue to be able to claim relief at their marginal rate of income tax on the day-to-day costs incurred in letting out a property, such as letting agent fees and replacing furniture.
The Government understands that people, including those who rent property, are worried about the cost-of-living challenges ahead. That’s why decisive action has been taken to support households across the UK, whilst remaining fiscally responsible.
While that appears to be the end of the petition, it is still live on the Government website until May and if it reaches 100,000 signatures there is a chance that it will be debated in Parliament.
Mark Alexander, the founder of Property118, said: “It’s no surprise the government has responded in this way – and it’s a shame that private landlords still have their tax calculated initially against gross rental income without interest payment deductions – unlike any other business in the UK.
“I would urge all landlords who haven’t already done so to consider their tax situation as a matter of urgency.”
The petition can be found on the Government’s petition website.
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Crouchender
12:42 PM, 19th January 2023, About A year ago
Reply to the comment left by Helen Smitj at 19/01/2023 - 12:31
The simple answer is politics. They need to be 'seen' to be working with Government. Ben Beadle has also stated the ship has sailed on S24 which I disagree with as a NRLA member. That is why they are not backing it as they could easily have done in their usual Friday afternoon emails to the membership but nothing. I have even stated it on the NRLA forum. Maybe Property Tribes can pick this up with him directly in their webcast due in Feb.
But we have to keep going to get that 100,000 with or without them
Andrew Milner
13:24 PM, 19th January 2023, About A year ago
Reply to the comment left by Gone Fishing at 19/01/2023 - 11:47
I assume you mean the availability and actual letting requirements. Assuming you can meet these (which with the right property you will do) you do have a choice
As someone else has said, this may be a factor in the expansion of AirBnB. Changing a BTL to an FHL avoids the need for incorporation etc to get full tax relief
Sunflower
14:04 PM, 19th January 2023, About A year ago
The government response doesn't make sense.
I don't think anybody thought the old system was unfair. It certainly wasn't introduced because landlords were in uproar about how unfair it was.
It was perfectly fair to exclude finance costs from total income calculations. And then to pay income tax on the actual money that you earned.
I have now been pushed into a higher income bracket than I'm in if the money i have left to live on is the measure.
And I pay more tax on this money than everyone else in the country who earns the same amount (landlords excepted). How is that fair?
Churchills Tax Advisers
14:06 PM, 19th January 2023, About A year ago
Reply to the comment left by Crouchender at 19/01/2023 - 12:42The ship has not sailed on s24.
Laws can be introduced and they can be withdrawn/amended. It happens all the time. If you don't try, you don't get.
As a first step, they could allow interest to be DEDUCTED from rental profits at 20%, for a lot of landlords this will prevent them going into the 40% bracket.
The representative associations should be fighting the landlords' corner, otherwise why are they there?
HUSAN LEAL
15:55 PM, 19th January 2023, About A year ago
Hi All,
With the amount of unincorporated Landlords in the UK who are significantly impacted by the introduction of Section 24 by George Osbourne, why are we still unable to overturn this since 2015? It is a wholly unjust and unfair additional tax imposed on us yet we seem to be unable to do anything about it. It has NO merit and has no logic to it as clearly demonstrated by Dr Rosalind Beck in her submissions to HM Treasury.
There was a recent petition I saw on Linked-In titled 'Reinstate tax relief allowing mortgage interest to be set against rental income' created by Simon J Foster. The deadline is 10/05/23. It needs to reach 100,000+ signatures before it is considered for debate in Parliament. Both my wife and I signed this immediately. To date, there are only 28,240 signatures. I'm shocked at how low this figure is. Are we really prepared to accept the status quo and be dictated to? If we are all in agreement that the changes should be overturned, can we PLEASE show unity and everyone access the petition and add their signature to it. For your convenience, the link is provided below:
https://petition.parliament.uk/petitions/627785
H
TheBiggerPicture
16:31 PM, 19th January 2023, About A year ago
I assume the point of the response is to dissuade the landlords from reaching 100,000.
With this interpretation, the response is a good thing, as it tells us having 100,000 signatories will make it uncomfortable for the government.
david porter
13:15 PM, 20th January 2023, About A year ago
Firstly the correct procedure is to whip up support with an orchestrated public relations exercise and Then
Put up the petition!!!!!!
Otherwise it will not succeed to get 100000?
We have a housing crisis in this country and local Government and Housing associations cannot step up to the plate largely due to the PSBR.
As far as I can see the private sector is the only way forward.
A higher rate taxpayer can buy a hotel and lease it to a hotel management company and get tax relief and the same applies to airBnb and commercial property.
The government has closed the door to wealthy people investing in private rental property by removing the tax incentive . As a consequence the housing crisis gets worse.
It is supposed to encourage people to but\y their own houses. A newly wed couple will buy a 3 bed house and have two person occupancy but the same house rented out will have every bedroom fully occupied . More people are housed in rental properties!!!!!!!!!
Churchills Tax Advisers
14:33 PM, 20th January 2023, About A year ago
Reply to the comment left by david porter at 20/01/2023 - 13:15
I agree that the petition needs more visibility. I have advised my clients and professional bodies, but it really needs to be pushed on social media and every MP should be written to by as many people as possible.
However, not my area of expertise, it needs influencers, etc to take up the cause.
Coops
9:43 AM, 21st January 2023, About A year ago
The only way anything will get changed is if all affected landlords stick together.
I contacted my local tory mp regarding the unfairness of section 24 and the burden put on local councils due to reduced private rental housing stock as landlords leave the sector.
Typically he would not answer direct questions and points to policies as per the link below.
https://www.gov.uk/government/publications/restricting-finance-cost-relief-for-individual-landlords/restricting-finance-cost-relief-for-individual-landlords
When asked to see the evidence of the monitoring and evaluation, I was told that i would have to contact hmrc myself.
So they obviously are not even monitoring their own policies.
Some good news is that groups like shelter seem to be easing on the landlord bashing, although unlikely, maybe they will come on-board.
If the landlord groups and housing charities could work together and get the government to introduce a national landlord accreditation/licencing scheme in exchange for revoking section 24, would be a sensible trade off.
Gary BTLowner
11:13 AM, 21st January 2023, About A year ago
Reply to the comment left by Helen Smitj at 19/01/2023 - 12:31
Will everyone who reads this article, as I have, write to the NRLA and urge them to email all their members. I have also asked Property 118 to do the same, but of course this is not in MA`s interests so they aren`t keen to do so.