Summer Budget 2015 – Landlords Reactions

Reply to the comment left by "Appalled Landlord" at "18/08/2015 - 22:07":

Hi AP ...so far the only examples we find from Megan Shaw show, upon closer inspection, that the idividual has a defunct, non viable business. But we have to look a little close to see that. £21400 tax due on ZERO profit doesnt work for for me.

...then followed up with more misleading doublespeak like:

"Only around 1 in 5 (18%) of individual landlords are expected to pay more tax as a result of this measure, with only 10% expected to pay more than £500 in additional tax and only 1% expected to pay more than £5,000 in additional tax. These landlords will typically have higher value property portfolios, larger rental income and larger finance costs....

...This change ensures all individual buy-to-let landlords will receive the same relief for their finance costs, reducing the advantage wealthy landlords may have in the property market. Landlords who are basic rate or non-taxpayers will only lose out if they have finance costs which currently receive relief at higher or additional rates of tax, such as if their finance costs and rental income are very large. The government expects around 94% of landlords who will have to pay more tax will have a taxable of income over £35,000. Of the 6% with taxable income under £35,000 and who have to pay more tax, they have an average (pre-tax) rental income of £64,380 and own on average 6 properties.

The government does not expect this to have a large impact on either house prices or rent levels due to the small overall proportion of the housing market affected (there are 1.6m buy to let mortgages outstanding in the UK overall, out of a total private rented sector of 4.4m households and total housing stock of 22.6m households in England). As above, only around 1 in 5 (18%) individual landlords are expected to pay more tax as a result of this measure. The OBR believe the impact on the housing market will be small and, taking account of the other measures in the budget, have not adjusted their forecast for house prices."

These statements do not match up with the figures and scenarios we have all looked at, most people dont "get " figures at all - nothing is as it seems with the text leading people even further up the garden path, the whole thing stinks.

Bullshit baffles brains , i think they have got themselves so confused they dont even understand the consequences of the proposals....

On a personal note my projected tax bill will go up from 40K last year to just shy of 100K (with 10% WT allowance removed as well) Will it take me out ? No ....i will seek to minimise it it everyway i can tho !

Reply to the comment left by "Neil Allen" at "18/08/2015 - 20:59":

Great letter Ian. I think the RLA and NLA should join forces as you say and we can all stump up cash for a legal case. And they should be mentioning that now; not namby-pamby irrelevancies.
I've said similar stuff regarding the 'energy efficiency' to our local RLA guy - I don't get it. The RLA did produce a good article stating how bad this is and so has the NLA, so I don't understand how they can then suggest discussing something like energy efficiency measures instead. If they want to negotiate what about the idea of introducing it for new purchases only? It is worrying. They have to represent their members but also landlords in general as they are being treated as though they are the voice of landlords. I think they could be 'star struck' at being in the same room as GO. Personally I'd feel intimidated, and wouldn't volunteer for it. But the people who do go have to not be intimidated and stand up for us all. A good compromise for me would be, for example, if HMOs were made exempt; the thing would then only have half the effect for me - but that's not the point. It's about all of us. And we need justice for all of us - so I'd never suggest that. There are other ways to get the message across though.
Just in case people don't know, some of us have been working on submissions for the Public Committee on the Finance Bill and some will definitely go out this week - so we aim to get our message across as much as we can. I also urge people to keep writing to MPs and to the Press. On balance, I'd actually favour the Press at the moment, as we need to get the message turned around and away from all the inaccurate reporting. My personal approach is to devour the papers at my local cafe and if there is anything relevant shoot an email off to the relevant journalist.
On a related topic, my brother gave me an article today which stated that there are 25 million empty bedrooms in the UK - largely because of the aging population not downsizing and now GO has encouraged them to stay put in the big expensive houses with the increase in the IHT threshold, but based on the family home and not assets in general. How effing stupid. Also, I think we should be arguing for more HMOs - they are an excellent use of space, environmentally friendly, cheap for tenants, sociable for younger tenants, great for job mobility etc. They have a bad name, but what's new when it comes to landlords? HMOs can be excellent and beautifully done even. These are the kinds of alternatives to suggest - incentives for freeing up and/or making better use of the houses we already have, as well as also building more.

Reply to the comment left by "Appalled Landlord" at "18/08/2015 - 22:07":

Yes. Apologies to all for the red herring on the carry forwards yesterday. The wording is so subtle, one could argue it both ways, Though I suspect trying it on with HMRC would get you nowhere. Many thanks Appalled.
BTW. I have worked out my costs to move to a Ltd : £90,000 in stamp duty and probably £100,000 in CGT , so a "fine" of £190,000 to move to a LTD , and save around '£10,000 extra tax a year.... Not worth it methinks. Instead, £10,000/36 tenancies = £277 per tenant x 10/6 = £462 extra rent needed per tenant per year or £38 per month per tenant
JUST TO STAY STANDING STILL,!

Reply to the comment left by "Trendo " at "18/08/2015 - 17:56":

Hi Trendo

Thanks for this : have you emailed back following your response from Megan Shaw, and Appalled's recalculation and asked how a landlord would then pay the £23,600 out of a zero profit in that year...? Just keep it simple and see what they say...?

Hi Mark.
Is there any quick way of going straight to, say, page 100 of this thread, without having to scroll from page 1 and then turn 2 pages at a time? Just wondering if it's possible. Thanks.

Reply to the comment left by "Ros ." at "19/08/2015 - 08:39":

In the url that you seen in your browser....just replace the number for the current page ypu are onwith the number that you see.....In this case 303 with 100

Thanks James.

Right. I'm looking for a volunteer researcher to look something up for me. As GO mentioned in the Budget speech his desire to harmonise policies between the G7 countries, I need to know if any of them don't allow landlords to offset the finance costs of running their businesses, I've read that Finland is possibly the only country in Europe who doesn't (and am not even sure if that is the case), but apparently France, Italy and Germany do allow it. So it's just the other 3 G7 countries that I need to know about: Canada, the USA and Japan. Can someone get me some reliable information on this? It's for a submission to the Public Committee on the Finance Bill. Thanks in advance. I'll probably be out for a few hours but will pick up the info later.

Reply to the comment left by "Ian Simpson" at "19/08/2015 - 07:29":

I emailed her with the "1 BTL and HMRC tax me out of business" ...waiting for a reply on that one first. The other eg was found on an accounting website, lets see what comments i get onthe first one before going into round 2

Hi Ros,

Page three of this IRS document for the USA:

http://www.irs.gov/pub/irs-pdf/p527.pdf

Interestingly I think you can also claim depreciation!

I think what has been understated thus far is what impact the dividend tax changes will do for the buy to let sector. Ironically, I believe it will actual FUEL demand for buy to let. Having spoken to a few friends who operate consultancy businesses through limited companies, the dividend tax change now penalises anyone that takes out more than 40ish thousand per year from their business. As a result that money will now stay invested within the business. The only 2 options left is to invest the surplus.....into a pension (which is limited to 40k per year) or put the money into a limited company with the purpose of investing in buy to let. It is the latter path that most of my friends have chosen to pursue.