Summer Budget 2015 – Landlords Reactions

I went to see my accountant about the proposed changes and all he could say at his stage was that we should wait for the actual details of the proposals before making any plans.
The idea of removing the right to offset the costs of doing business against the income from business is clearly ludicrous. Is there any other business where you cannot deduct your fair and reasonable costs? I cannot think of one.
The fatuous line about private individual landlords getting an "unfair advantage" compared to owner-occupiers because they can deduct the cost of the revenue producing asset is hogwash.
All businesses can deduct, for example, heat and light bills, the cost of purchasing vehicles and the fuel they put in them, the cost of fixtures, fittings, stationery, uniforms and clothing for staff, training,business travel, accountancy and professional fees. And of course , their finance costs.
If the wretched Osborne wants to truly level the playing field then I suggest all businesses are asked to give up all their deductibles too.
I hope the NLA, RLA, Property 118 and any other Landlord organisations can work together to scupper these silly and dangerous proposals.
The providers of finance to private (buy-to-let) landlords must be looking with great alarm at these proposals. There must be thousands of Landlords who would be unable to continue in business if they were taxed on gross profit rather than net.
I wonder if these lenders can be brought into a campaign by the Landlord trade bodies?

Reply to the comment left by "Mark Alexander" at "21/07/2015 - 13:20":

Hi Mark.
I only watched it quickly and am not familiar with some terms- such as incorporation relief' or something like that, but I thought it was quite positive - as the courts apparently felt property letting and management involved a lot of activities, provided an array of services and was a 'business.' It seems more that the HMRC doesn't want to view it that way. And it was also mentioned that short-term lets involve more work and are sometimes like quasi-hotels. I think this 'Moyne Ramsay case' is going to be critical for us and it looks like the couple are winning so far. I'll have to watch the video again, but that was my initial understanding of it.

Reply to the comment left by "Mark Alexander" at "21/07/2015 - 15:54":

Mark its a travesty but what a beautiful example of smoke and mirrors this is. The way it has been phrased so that it confuses people
( took 2 weeks for the penny to drop for me ) and the way it has been put out to the press as hitting tax relief on wealthier landlords. It's brilliant George....did you spend time with David Copperfield making planes disappear before you came up with this one?

Reply to the comment left by "Simon Roads" at "21/07/2015 - 12:09":

Hi Simon.
I am so glad to hear that the RLA is doing something! Hooray!
Regarding the Wear and Tear document published, I am now assuming I should send all my letters to Megan Shaw - and that she is not just dealing with the Wear and Tear issue. It says affected people are invited to comment; well since I haven't seen that statement with regard to the Landlord Tax (aka tax relief measure) I assume she's also in charge of the 'consultation after the act' process.
I just read the 'wear and tear' stuff - I felt sick to my stomach when they started talking about 'relief' again, thinking they might pull the same trick with our maintenance costs as they did with our finance costs and disallowing us to put them in in their entirety. Personally, I chose years ago to put my actual costs in. They don't seem to have pulled the same trick (yet) but I did find it strange that the document states that if you replace a washing machine with a washer-dryer, you have made an improvement and can't claim for it. Are you supposed to wait until you sell 10 or 20 years down the line to claim the dryer part as a capital improvement (when it will have already gone to the scrapyard years before) or does the dryer portion now become a landlord's personal expenditure?? Or does it just disappear, like the finance costs of servicing the mortgages - do these things drift off into the ether? There is just so much crap to try and get your head around, that every day I feel my head clogged up with it all.

Reply to the comment left by "Kathy Evans" at "21/07/2015 - 09:19":

Hi Kathy

You do not say if you have other income. If your other income does not exceed £16,000 you will not be affected.

Reply to the comment left by "Stewart Jackson" at "21/07/2015 - 17:00":

I think one lender - namely the Government-owned Mortgage Express - will be very happy. Call me a cynic, but this is one quick way of getting rid of a chunk of their mortgage book. They've been trying to persuade us for years, but this will really strengthen their hand - and the money from the redeemed mortgages will go into Government coffers. It could backfire though if people hang on until the bitter end, withdrawing our reserves, all savings etc. until we are bankrupted and the houses repossessed - Mortgage Express might lose then (but the Government will still have fleeced us of all we have).
(unless I'm missing something here - it's not my area of expertise)

I had a very long chat with one of my former mortgage broker colleagues at lunchtime today.

He had read the Newspapers and come to the conclusion that most of his BTL clients wouldn't be affected too much.

I emailed him a link to the example article (linked below) whilst we were speaking. He too is now a very worried man and will be suggesting to his company that I am invited to present the reality of this situation to all of his fellow advisers.
.

Reply to the comment left by "Ros ." at "21/07/2015 - 17:12":

Ros

Re washing machine.
Unfortunately the law and HMRC are quite clear on this.
- If the asset can do the same job as before it is a replacement
- if the asset can do something which the original asset could not then it is not allowable against the rental income.
In your case the new machine can dry as well as wash so it is an improvement and not allowable.
However if the improvement is just to bring the asset to industry standard, such as replacing single glazing with double glazing, then it is allowable.

If you decided to lease the new washer/dryer then the lease rentals would be allowable.

Now there is a business opportunity for someone!

Regarding the idea that we don't run businesses and don't work for a living, I see another contradiction. Years ago, we were the subject of a full tax investigation. Apart from coming out squeaky clean (only one or two errors made), we were informed that given our low income at the time, we were entitled to tax credits. I still didn't claim them for a few years (foolishly), as I felt that we didn't need 'benefits.' For several years, according to the HMRC, we were entitled to these credits - I think the hours we declared for running our business/doing our WORK might have been 35 hours for my partner and 16 for myself. So, according to the HMRC we were WORKING. I'm wondering how, on the one hand, they deem us to be inactive and on the other, they tell us we are entitled to money to top up our income. Would they do that if we simply invested in stocks and shares, whilst lounging on our chaises longues, coiffing gin?

Reply to the comment left by "Simon Lever" at "21/07/2015 - 16:46":

Thanks Simon.