Summer Budget 2015 – Landlords Reactions

Reply to the comment left by "Mark Alexander" at "10/08/2015 - 16:25":

Still needs a thorough proofread, but excellent resource.

Reply to the comment left by "Mark Alexander" at "10/08/2015 - 15:54":

It's the pressure Mark! So much going on 😉

Quote from the Times today:
'George Osborne is facing the first Conservative revolt over the Budget from MPs worried about plans to remove up to £1,000 a year in tax credits for families.'
Apparently, our friends at the IFS have been pointing out how much working families will lose, so two 'formerly loyal Tory MPs' - Andrew Percy, MP for Brigg and Goole and Guto Bebb, MP for Aberconwy, are 'leading the charge.'
Guto says: 'the changes to tax credits have been somewhat under-scrutinised. The changes are both eye-wateringly painful to those affected, but also reverse a key policy platform of the last 5 years - namely, making work pay.'
Is anyone in either of these guys' constituencies? It would be worth a try getting them on board. 1. Because they're willing to not toe the party line. 2. Because they can see things logically. 3. Because they could maybe understand the idea that the 'tax relief' decision is also going to affect innocent people in a negative way (both landlords and tenants).
I've noticed 'living standards' seems to be a key phrase - and so we can use that phrase - pointing out that if rents rise this poses a threat to renters' living standards, just as the changes in tax credits do. And both of these will be caused directly by a simplistic Budget, which does not address the details of the impact of some very stupid ideas.

Reply to the comment left by "Mark Alexander" at "10/08/2015 - 15:54":

It's the pressure Mark! So much going on 😉

The RLA have now launched a campaign against this too. Here's the link (I am allowed to post this, yes?)

http://www.rla.org.uk/landlord/lobbying/tax/index.shtml

Reply to the comment left by "Gentle Landlord" at "10/08/2015 - 16:43":

Many thanks GL, your comment is much appreciated. I also have more I'd like to get on the site but it would perhaps get just a little too busy. EG, How rents going up means people are squeezed, which could lead to increased crime. Evictions mean people are homeless and could be lots of empty houses about, resulting in squatters - now a criminal offence. Therefore a Police and Neighbourhood Watch page would be good.

Kids will feel pressure at home so would not perform to their best in school, hence it affects teachers.

AND ONE AREA OF COMMERCE THAT COULD DO REALLY WELL FROM THE CHANGE?? The payday loan companies will be loving it because ordinary people will feel they have to borrow money to survive. That will just be so bad if this leads to them getting more business on the APR's they charge.

Reply to the comment left by "John McKay" at "10/08/2015 - 17:29":

Hi John.
Well done for such excellent work.
I've been trying to get my head around a kind of flow-chart (if that's the right expression). Something that could be on one A4, with the 'tax relief restriction/abolition of right to offset finance costs' in the middle and then all kinds of things flowing from it:
Bankruptcies
Rent rises
Evictions
Repossessions.
Glut of houses on market - House price drops/crash
Owner-occupiers suffering and trapped in negative equity
empty houses (and as you say, squatters and crime.
Unemployment of landlords and reliance on state also now for their pensions.
Social misery - squeeze on living standards
Large corporations snapping up houses and renting them out at higher rents.
First time buyers may be able to snap up some (rare positive)
Large bills for council having to house people in B and Bs.
Treasury nets some revenue from CGT and new tax.
Treasury loses revenue from loss of tax on rental income, Plus other deficits created by measure???

Basically, building on what you're done and simplifying it down to one graphic page that we can show people.
I wanted to do it myself, but am out of the swing of this kind of thing, so maybe you or a volunteer reading this can do it? My brother says 'Smart Art' is a good programme, but I've only got a 2007 version and I can't find the right kind of diagram. What do you think?

If that looks good, we could then try and do a simple A4 graph on alternative solutions to the 2 apparent problems GO is allegedly concerned about: FTBs being able to get a foot on the ladder AND house price inflation and possibility of boom and bust?

Reply to the comment left by "John McKay" at "10/08/2015 - 17:29":

You welcome John.

Reply to the comment left by "Dom " at "10/08/2015 - 17:09":

100% of Letting Supermarket clients are members of Property118 so yes, they are!
🙂
.

UK property investors
One of the biggest groups of people who can be hit by higher tax rates are property investors. The high price rises over the past couple of years have left many with huge paper gains, but also significant levels of debt. If properties have been remortgaged to obtain funds to invest in more property purchases it could easily be the case that there may not be enough cash left after the sale to satisfy any UK tax bill.

By moving overseas before disposal, they would be looking to ensure that any disposal of the properties would be free of UK capital gains tax. If they also establish residence in a capital gains tax-free country, they could avoid overseas tax as well.

Losing UK residence status

There is a much-publicised rule from the Revenue that states you can lose UK residence if you are in the UK for less than 90 days per tax year (on average over a period of up to four tax years). However it's crucial that when considering this you don't see it as just a case of counting UK visits. Other people have done this and have come a cropper.

The Revenue are concerned with people leaving the UK, claiming non-residence but still having significant UK ties. So if you want to establish non-UK residence you should look at:

Keeping UK visits to an absolute minimum, especially in the three tax years after you leave the UK
As well as keeping the number of days to a minimum, you would also need to keep the number of separate visits to the UK to a minimum. The UK tax requires not only the number of days here to be disclosed but the number of visits.
Selling UK property
Buying a property overseas
Gaining residence overseas
Avoiding being a director in UK companies
Transferring any remaining UK assets overseas
Moving your family with you overseas
Having your possessions with you overseas
When going overseas you should always try to ensure that your absence is for at least three years. When combined with the above this would then also assist in ensuring your are non-UK ordinarily resident (which is important, particularly in terms of the capital gains tax exemption).

Whichever option you go for or whatever tax you wish to avoid, actually cutting UK ties, selling UK assets and minimising visits are crucial. Ensure you take detailed advice on any plan to become non-resident for tax purposes.