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Treasury Defends Tax Hike for Landlords After Petition Protest

by guildy | 13 Jun 2018 | News, Tax (England), Tax (Wales) | 6 comments

Treasury Defends Tax Hike for Landlords After Petition Protest

Protestors campaigning against a tax hike for landlords have forced the government to defend the policy.

A petition started by property investor Mark Homer gathered 14,000 supporters – enough to force the government to make a written response to the protest.

Homer was complaining about the scrapping of mortgage interest relief for landlords who pay income tax at the higher rate – 40% or more.

The legislation means all private landlords will pay tax on buy to let or house in multiple occupation profits will pick up tax relief of 20% instead of their higher rate.

The reduction in relief is being phased in over three years and will reach 20% in 2020-21.

“The government introduced changes to finance cost relief as part of a package of measures at Summer Budget 2015 to help reduce the deficit and rebalance the economy,” said the response from The Treasury.

“By restricting landlords’ finance cost relief to the basic rate of income tax we are helping to reduce the advantage landlords may have over home owners in the property market.

“Income tax relief for finance costs is not available to ordinary home buyers.

“Previously, landlords could get relief on their finance costs at their marginal rate of income tax.

“By restricting finance cost relief to the basic rate, all individual landlords will receive the same rate of income tax relief on their finance costs.

“Landlords can still claim income tax relief at their marginal rate of tax on day-to-day running costs incurred in letting out a property, such as letting agent fees and replacing furniture.

“Finance costs are different to other expenses, as having a mortgage allows the landlord to purchase a more expensive property and incur larger gains on the investment than they would have done without it.

“Using actual self-assessment data, HMRC estimate that only one in five landlords will pay more tax on their property income because of this measure.”

The petition is still open– and if the campaign hits 100,000 signatures, the issue will be debated in Parliament.

6 Comments

  1. Sue passmore
    Sue passmore on 13/06/2018 at 3:12 pm

    I hope all your landlords sign this. I am a private landlord and this tax change has hit me heavily.

  2. James Corbett
    James Corbett on 13/06/2018 at 4:27 pm

    They seem to have forgotten that we are charged 40% tax on gains when selling rental property!
    No tax payable on selling your private residence.

  3. Malcolm Ingham
    Malcolm Ingham on 19/06/2018 at 6:42 am

    I’d like to sign the petition but it will not let me.

    • guildy
      guildy on 19/06/2018 at 8:29 am

      Just tried it again and it’s still open. The signature happens when you click on the link in the email which is sent to you. Has that email gone into spam perhaps?

      Petition signature

  4. Paul Herlihy
    Paul Herlihy on 20/06/2018 at 8:07 am

    Could someone send me the link or email please so I can sign.

    paul@paconstruction.org.uk

    Many Thanks

    Paul

    • guildy
      guildy on 20/06/2018 at 8:56 am

      It’s at the bottom of the article copied here: https://petition.parliament.uk/petitions/219279

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