Summer Budget 2015 – Landlords Reactions

Reply to the comment left by "Ros ." at "22/07/2015 - 00:15":

Thks Ros.

I wouldnt go with "Landlord tax" ..although it is far batter than talking about "LLRelief" !

That lumps all LL together and has public support for taxing them as they are are greedy nasty selfish people.

We need to gain support for the smaller sector of individual LL as hardworking everyday people who are to become victims of a cash raid, whilst the government once again supports the big fat cat institutions.

Is anyone aware of the OECD BEPS (Base Erosion Profit Shifting) Action 4?

BEPS is targeted at global corporations, but I wonder if it may eventually affect UK business taxation?

I've left lots out, but the main point I see is:

Not all countries allow 100% deduction of interest / debt costs for businesses.
Some European countries allow, EG, 30% of turnover (some use EBITDA), to be deducted, regardless of the actual interest / debt cost.
EG £1 million turnover would mean £300k maximum deduction allowed for interest/debt costs.

Allowing 100% deduction of interest is seen as encouraging over-leveraging (which fuelled the global financial crisis), and rewarding irresponsible debt at taxpayer cost.
IE it is seen as a problem.

In ways the UK is seen as a tax haven, especially for corporations wishing to deduct 100% of their interest/debt costs (compared to countries that do not allow it).

This has played out in the press with global corps (Amazon, Google et al) moving costs around their group, and to favourable jurisdictions ("transfer pricing"), resulting in tiny, but legal, tax bills.

So - some large/global corps have tiny UK tax bills because they legally offset 100% of their debt costs against UK tax, and this is a problem the OECD wants to fix.

After the press noise, the UK and Australia rapidly brought in the diverted profits tax for global companies, but the OECD was not convinced this move tackles the issue.

The EU is looking into making EU wide rules on the ratio of debt allowed for tax deduction.

The OECD had a public consultation on BEPS in February 2015.
British Property Federation and AREC contributed and fought the corner for 100% deduction of interest / debt costs.

Hopefully this will only apply to large and/or global corps, and will come to nothing for the UK PRS but, with the talk of moving to companies to avoid tax, I thought it might be in some way relevant to mention it.

Wow ...i know lets try this out , but who can we try it on ...i know ! individual LL, then if it goes wrong it wont be faceless companies with ltd liability that suffer - it will be individuals and families. Let's rename it a "tax relief" and get us some cash !

Thks for the info Vero .. i'm getting way to cynical here i need to go !

This is not tax relief or landlord tax.

This is 'Turnover tax'.

The Left talked about turnover tax for the likes of Google, Amazon, Starbucks etc. But the Conservatives have chosen to introduce Turnover tax on individual landlords.

They have chosen to raid our cash because we are all individuals and do not have lobby groups like other more organised sectors of the economy.

I think the long term aim is to screw all private sector landlords. Small scale landlords will sell up (because if they are in the 40% band, it won't be worth their while.) Selling up means plenty of CGT revenue for George.

Larger Landlords may be walking into a cleverly placed trap by incorporating properties into a Ltd company as Vero Streetflat so rightly points out. Gordon Brown laid a similar trap. He got sole traders to incorporate with a promise of 10% corporation tax, and once sole traders incorporated in droves, he withdrew the 10% band.

On another note, I kind of saw this coming.

I am not a banker but I hated the principle of bankers bonus tax or bankers levy. Once we as a society accept that different groups of people can just be picked off at will and taxed arbitarily for being part of that group, it is the thin end of the wedge.

With the bankers taxes, no one listened to the voices of complaining bankers because they were unpopular with the public at large.... And the public at large just accepted it because 'bankers deserved it' and 'it didn't affect them'.

But this sets an improtant precedent that any group and be picked on provided there won't be voter uproar.

So now its our turn...

Reply to the comment left by "steve sanders" at "22/07/2015 - 08:23":

Well what does everyone else think about using 'turnover tax' to describe it, as Steve says? I'm happy with that - I want something short and snappy and it is more accurate and also might get others worried about having it applied to them?

Reply to the comment left by "Vero streetflat" at "22/07/2015 - 00:45":

Regarding countries which don't allow 100% deduction of interest, I wonder if they ever single out groups and/or private landlords specifically? And it would be good to know which countries and what they do - as is 'Great' Britain going to be following the lead of countries whose general policies/levels of corruption and so on we don't exactly respect?

Reply to the comment left by "Ros ." at "22/07/2015 - 00:15":

Levy on Landlords "LOL" was a joke and would be used against us as well as for us.

I agree that landlord tax isn't the best idea because the media will add the word "relief" to the end of it.

Let's call it what it is, it's a levy.

If you want to play with acronyms such as ILL - Illegal Landlord Levy (which isn't technically correct) or ALL Aggressive Landlord Levy then by all means do. I'm sure there are better ones.
.

Reply to the comment left by "steve sanders" at "22/07/2015 - 08:23":

The ltd co thing may be a trap but i think its morr around attracting big corporate investment (particularly back from eire).

Be easier to close loophole on declaring uneven shares of ownership between married couples than to fundamentally change corporation tax.

Reply to the comment left by "Mark Alexander" at "22/07/2015 - 09:34":

How about Progressive Interest Landlord Levy.

A bitter PILL to swallow!