New EICR to cover any changes made by outgoing tenant?10:00 AM, 4th May 2021
About 2 weeks ago 96
Philip Hammond stated in the Budget:
‘A fair system will also ensure fairness between individuals so that people doing similar work for similar wages and enjoying similar state benefits pay similar levels of tax.’
I was very pleased to see this basic principle affirmed by the Chancellor as, logically, he will now have to reverse Section 24.
In my report on this I pointed out the wide differentials in the treatment of very similar, sometimes identical businesses. The link is below as well as the relevant extract. I would now urge people to lobby both Philip Hammond and Gavin Barwell and show them this very clear table which provides incontrovertible evidence that Section 24 must go!
Click Here to read the full report: SECTION 24 of the Finance (no. 2) Act 2015: “The unjust legislation that will make the UK housing crisis much worse”
Section 24 aggravates what is already a highly contradictory tax treatment of broadly similar (sometimes identical) housing provision. This can be seen in the following table.
Assuming that each of the property owners in the table received an annual rental income of £200,000 and made annual interest payments of £100,000 on the borrowing costs they incurred in setting up their businesses and other costs (repairs, maintenance, running costs etc.) came to £50,000, each would make a pre-tax profit of £50,000. The table shows how after the full implementation of s24, their tax treatment will be hugely inequitable. For example an incorporated landlord would pay £7,950 in tax whilst the ‘individual’ landlord would pay £33,600. The number of properties in the portfolios and the amount of work involved in running the portfolios would be irrelevant as would the ‘professionalism’ with which they were run. As, historically, the preferred advice to landlords was to set up as ‘individuals’ and not as companies, most portfolio landlords who run highly successful and viable portfolios are in the second category of tax treatment.
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