Unfair UK taxation of privately owned rental PROPERTY businesses

Superb comparison Mark. Reveals in very clear terms the taxation injustices dealt out upon private property rental businesses. Your post deserves widespread distribution. Has it gone off The Guardian?

Reply to the comment left by Graham Turrell, Landlord & Entrepreneur at 08/03/2023 - 10:49
The best way to achieve widespread distribution is for Property118 members to share it on LinkedIn, Facebook etc and to email links to centers of influence.

There is only so much we can do as a small team at Property118 so we need our Members all help to spread the word.

One thought I had on the matter was your mention of capital gains tax. Would there be any?

It seems like one of the major differences between the two industries is that for one of them there is the expectation that the item you are renting will also go up in value.

In my head that's why there is the difference. A car will not be worth the price you paid for it after a couple of years and 80,000 miles on the clock.

Reply to the comment left by The Forever Tenant at 08/03/2023 - 15:00
I follow your logic using the car rental company example but in many businesses the value of assets do increase, e.g. care homes, pubs, hotels B&B's, campsites, marina's etc. etc.

Those businesses are all service business that are not too different to property rental businesses either. For example, a person who rents a mooring at a marina will probably be on a similar contract terms to a tenant renting a home from a landlord. Obviously without anywhere near as many regulations attached but that another story altogether.

Well said Mark, unfortunately the anti-landlord rhetoric is incessant with very little basis in fact.

CGT would be slightly more tolerable if the capital amount was index linked. Invariably rental property is held long term.

For example, one I bought in 1994 at £28k, is now worth £165k. So my CGT calculation is on £137k. But apply inflation to the £28k and that becomes £54k by todays standards, so apply that and £111k for CGT slightly more understandable.

Or we should be allowed to claim our annual CGT allowance against our gains like someone share dealing would.

The fact we can not re-invest is also so wrong and I do wonder if this was as a result of "accidental" landlords and the encouragement of BTL rather than leaving our industry to professional landlords using commercial lending.

Reply to the comment left by Smiffy at 09/03/2023 - 07:54
Annual CGT allowances will be halved in April and halved again the following April, so even if they could be rolled over they would be worth much.

Reply to the comment left by Mark Alexander - Founder of Property118 at 09/03/2023 - 12:16
But if I could have used the last 29 years worth as the Capital Gain occurred, I'd have a £300k+ CGT allowance.

I'd still be paying CGT, because of the crazy way property has risen, but at least I'd have the allowances I just couldn't access.

Dear Mark
I am happy to note your involvement in this debate, and, if I am allowed to paraphrase, your proposal that HMRC should treat owning of property with a view to renting a "business" regardless of whether it is owned by a sole trader, partnership or a company.
I read genuinely troubled comments here on the basis that the rents do not cover every aspect of expenditure by a LL (be it, EICR, fitted kitchen or mortgage interest), and the LL should be almost guaranteed that he makes a profit.
When I said my rents are determined by supply and demand (which means effective demand), I was accused of being "completely mad... or clueless" and of being "parasitic" or running a "charity."
I then said at 10.36 am 7/3/23, that incidentally HMRC does not treat this as business but as holding and managing an investment.
Your article is 23.09 on 7/3/23 and received on 8/3/23.
We have to understand the history.
Land was owned by the Landed Gentry. They use a Strict Settlement to cater for all members of the family.
When traders began to own land, we invented a trust for sale for all the terraced houses and other houses.
Board of Inland Revenue taxed commercial rents under a separate Schedule A. There was no provision to tax Furnished Rents other than under the "dustbin provisions" of Schedule D, Case Vi.
The theory was that it is NOT a business, but holding of an investment, like shares.
We cannot have contradictory statements.
We say the LL does not have an Other income of over £55k.
We say we do not make a profit.
We say we supply housing to those on benefits and UC.
We say we go on skiing holidays.
I who do not complain, have not increased my rents for the last few years, am parasitic.
There should be a campaign/discussion with the major political parties for a revised model of PRS.
Is the PRS for people with effective demand only?
Is the PRS partly or wholly for social housing tenants (no effective demand) but mostly made up of HB and UC?
And, other not falling under the above 2.
Different rules should apply, and be made clear, and the system made efficient (such as direct payment to LL, or queries to be dealt within a time limit, etc etc).
Should the Tenant provide the white goods, and be responsible for decorations, and furniture and furnishings? No objection to children or pets?
A completely new model and new taxation models should be called for.

Reply to the comment left by SCP at 10/03/2023 - 19:09
I agree with every word you have said. The word parasite is commonly used to describe landlords by the people who truly despise us these days and sadly those people are growing in numbers.

You and I alone will never be heard by the policy makers, but we do have a obligation to share our views with others and to ask the same of them. That’s the only way I can think of for us to be heard.