Summer Budget 2015 – Landlords Reactions

I think what you guys are saying is that, you would continue to pay tax as it has been with the EXCEPTION of Interest relief which will be deducted from you total tax which is due to HMRC.

This relief is set at 20% of total interest you paid will be minus off from tax due. If there is no Tax due then this relief will be carried forward to following years.

Have I understood your explanation?

Thanks Michelle

Hi all.
I think it is important to use our own terminology - the terminology we have always used - that interest payments are generally our biggest cost and that we put them in our tax return as a legitimate expense - just as any business would put its loan interest into its tax return and not pay tax on it, as this is a bizarre idea.
As Michelle says, how can you be expected to pay income tax on something that isn't income? It's not money coming in; it's money going out.
For me, I don't really want to talk about 'tax relief' as that's not my terminology and I want to resist talking in any way that makes the 'new scenario' seem legitimate. It's not.
I was just talking to my electrician - if he buys a new work van or tools and takes out a loan and pays interest on this, he can claim it as a legitimate expense. So the only way this move can be justified is if there is some kind of argument or acceptance of an idea that landlords constitute a separate category that are somehow deserving of punishment and discrimination,. We have time, luckily. I think it is important that we all preserve some energy and make our voices heard outside of this forum,, first and foremost - by writing to our MPs, Ministers and the Chancellor., It looks like we only have a couple of months before the Royal Assent (I've heard 'autumn' mentioned - not sure if that would be October?)
After that, if they insist on bringing in this patently discriminatory measure, we should be looking at a class action. I like to plan ahead, so it would be good if anyone can think of how we could go about bringing a legal case. We can't just hand over our livelihoods and lose the fruit of all our labour - as someone just said - dealing with all of those tenants from hell for nothing - we have to FIGHT.

Reply to the comment left by "Gary Mason" at "14/07/2015 - 20:31":

By Jove - I think he's got it.

Except for 1 thing. The amount of interst that can be offest is limited to the amount of rental "profit" (rent less other expenses) in the year. The rest of the interest, if any, can be carried forward to be offset against future rental profits.

Example. Rental profit £20,000, mortgage interest £25,000.
£20,000 of interest is used to reduce tax for year (£4,000)
The remaining £5,000 of interst can be carried forward to be offset against future rental profits.

Reply to the comment left by "Gary Mason" at "14/07/2015 - 19:29":

No Gary, Mark is completely right.

Interest is not added on to income, as I have written several times today.

Currently your taxable profit is £33,500. In 2020/21 it would be £84,500.

To work out the real effect you would need to add the salary of £37,000 to both figures of taxable profit.

Currently the total is £70,500. In 2020/21 the total would be £121,500. The difference, £51,000, would all be taxed at 40% making £20,400 more in tax, and you would then get interest relief of £10,200, leaving £10,200.

But in addition you might lose your personal allowance at this point – I can’t remember the threshold – which would increase the tax payable.

Reply to the comment left by "Appalled Landlord" at "14/07/2015 - 21:01":

Appalled landlord, I think I am going mad or you are keep changing your goal posts. This is total madness.

Reply to the comment left by "Gary Mason" at "14/07/2015 - 19:29":

hi Gary Mason.. I would like to speak with you, ...can you pass me your details to me.. I couldnt find option to ping or PM you...

Reply to the comment left by "Ros ." at "14/07/2015 - 20:49":

So who has emailed their mp?

I have and today nick Gibb mp (conservative) replied telling he has written to the chancellor on this matter and will update me with the response. I'll update when I get George osbourne's response.

I think 330 similar letters from every conservative mp could be quite persuasive.

Reply to the comment left by "Gary Mason" at "14/07/2015 - 20:23":

No, Gary, the more interest you pay the worse off you will be, because the restriction of relief, or levy as I call it, will be applied to a bigger figure.

My MP, Andrew Murrison, has also promised to write to the Chancellor.

2 down 329 to go!