Chancellor George Osborne is landlord bashing again by clobbering landlords with a plan to levy more tax from them than other homeowners when they invest in buy to let.
Osborne has taken every opportunity to wield the big stick to stop buy to let landlords expanding their businesses by snatching away tax reliefs that eat into property profits.
The latest is a move to stop landlords benefitting from an 8% discount in capital gains tax.
Osborne announced in his Budget that he would let other property owners pay any CGT on profits they had made from homes at a lower rate of 10% and higher rate of 20% while leaving the rates at 18% and 28% for landlords.
The Finance Act triggering the CGT reform goes to committee stage at Westminster before the end of the month.
Osborne’s master plan for taxing landlords to within an inch of their life is now revealed.
He has a triple whammy aimed at clawing more money from landlords at every stage of property investment:
- Buying a home to rent attracts a 3% Stamp Duty surcharge for private landlords, which places a barrier to entry across the market for new landlords and makes extending portfolios more expensive for professional landlords
- Owning a home, landlords paying income tax at 40% or higher will lose 50% of their finance interest relief and their wear and tear allowance based on 10% of net rents regardless if any money was spent on replacing furniture or equipment. Instead, they will have a 20% tax credit for interest payments and a new replacement allowance that matches spending on furniture and equipment pound for pound
- Selling a home, landlords face paying a higher capital gains tax rate that other property owners.
Taken together, the three tax grabs could add up to a substantial amount of money flowing into the Treasury from buy to let.
Of course nobody wants to pay more tax, yet Landlords seem to be clobbered with more petty regulation – e.g., asking tenants ‘if they consent to receive information by e-mail’! A question that may have been appropriate in 1996 – but what a ridiculous question for 2016.
Most people cannot afford to buy a property at some point early in their careers. Landlords take the risk of buying a property and provide a service letting it to those that are unable to buy for themselves or maybe it’s just expedient for some to rent for a while.
It looks like we are the new cash cow for Osbourne – rather like smokers are.
Axe the tenant tax is an excellent site on Facebook – if you haven’t read/supported it please have a read. They are actively fighting the discrimination against property business owners with mortgages.