Summer Budget 2015 – Landlords Reactions

Reply to the comment left by "steve p" at "22/12/2015 - 10:49":

Topping the list of those who do not understand the difference between income and profit is George Osborne, and he decides the fiscal policy for the country.

Reply to the comment left by "Trendo " at "22/12/2015 - 11:00":

Never mind console yourself with some Cadbury's chocolate . . . .

Reply to the comment left by "David Price" at "22/12/2015 - 12:11":

Cadbury, owned by Mondelez one of the arch tax avoiders of the world and based in Switzerland. Same goes for Greeen & Blacks, Bel Vita, Cote d'Or, Milka, TUC, Toblerone and Oreos. In 2014 Mondelz declared a pretax profit of £96.5m in the UK on which it paid not a single penny of corporation tax. This is unsustainable and the Chancellor could and should fill his boots by taxing legitimate profit from multinationals using international accounting standards to the detriment of countries in which they operate.

Reply to the comment left by "steve p" at "22/12/2015 - 12:01":

Hi steve

BTL interest is the cost of servicing a loan that was taken out to buy an asset that generates a taxable income from providing accommodation to those who need it. The interest is a cost that is properly deducted from the rental income to calculate the taxable profit.

This holds true no matter how many properties a person owns, or how much time he or she spends managing them.

There is no comparison with borrowing to invest in shares. This is another red herring, used by supporters of the tax grab to confuse the public. Buying shares just transfers money from the new holder to the previous holder. No product or service arises from this change of ownership.

The most important rule about buying shares is “never invest money you can’t afford to lose”. Anyone who has to borrow to buy shares is ignoring that advice

Reply to the comment left by "David Price" at "22/12/2015 - 12:11":

Can't do that as they are tax dodgers and haven't paid any corporation tax in uk for 5 years or more - couldn't condone that....

Some observations from this source, which may be useful in the Judicial Review:

http://www.echr.coe.int/LibraryDocs/DG2/HRFILES/DG2-EN-HRFILES-11%281998%29.pdf

'...interference [with property]...may also arise from a court decision or from legislation.'
(p. 22)
(Ref. Eur. Court H.R., Marckx judgment of 13 June 1979, Series A no. 31, para. 27: “Article 25 of the Convention entitles individuals to contend that a law violates their rights by itself, in the absence of an individual measure of implementation, if they run the risk of being directly affected by it”)

With regard to the Government's express desire to 'level the playing field between 'private' landlords and owner-occupiers (in effect to favour owner-occupiers even more) and also with regard to overt incentivising of institutions to build to rent at the same time as the introduction of a punitive tax regime for 'private,' encumbered landlords:

'The Commission must nevertheless make sure that in determining the effects on property of legal relationships between individuals, the law does not create such inequality that one person could be arbitrarily and unjustifiably deprived of property in favour of another.' (p.22)
(ref. European Commission H.R. of 12 October, 1982, Bramelid and Malmstrom v. Sweden, Nos 8588/79 and 8589/79, DR 29, p.64)
Article 1 of Protocol No, 1: (p.23)

Regarding 'control and deprivation' of property:

We would argue that Clause 24 effectively leads to the expropriation of property by making it unviable for private individuals' businesses, whilst institutional investors are unjustifiably and inexplicably incentivised; this is also anti-competition, as it could give institutions a virtual monopoly. It may also constitute 'indirect deprivation' (similar to constructive dismissal).

Regarding taxation: (p.25)

'...it can reasonably be argued that the Convention bodies do not review the actual decision to raise taxes, but the proportionality between the levels of taxes and the means of those required to pay them.'
(reference: Eur. Court H.R., Gasus Dosier- und Fördertechnik GmbH v. the Netherlands judgment of 23 February 1995, Series A no. 306-B, para. 59. For a commentary, see L. Sermet, “Chronique”, Revue universelle des droits de l’homme, 1996, p. 26.)

If anyone else can spot anything useful in the document, please paste it here.

"Regarding ‘control and deprivation’ of property:"

An example of an to competition is that energy companies had to increase prices when they have an oil price increase OR a tax hike on oil. They may absorb a small temporary increase. They are very slow to put prices down, who oil prices fall. The only reason they do is if ordered to by the Regulator OR by Competition.

If there is little competition between the Wilsons or the Hoogstratens, or their later day equivalents, or they are in the Middle or Far East, and the tax regime means Ma & Pa Housing Providers are not treated the same for tax or taxed to economic oblivion, this is palpably unjust.

Reply to the comment left by "Trendo " at "22/12/2015 - 11:00":

Hi Trendo

If you had logged into your facebook account

http://news.sky.com/story/1568029/facebook-defends-paying-just-4327-in-tax

you may have liked this story

http://www.channel4.com/news/george-osborne-family-business-6m-deal-with-offshore-firm

Reply to the comment left by "Carol Duckfield" at "22/12/2015 - 13:26":

OK no chocolate but perhaps Trendo can watch a Netflix film . . . .

Reply to the comment left by "Appalled Landlord" at "22/12/2015 - 13:08":

"BTL interest is the cost of servicing a loan that was taken out to buy an asset that generates a taxable income from providing accommodation to those who need it. The interest is a cost that is properly deducted from the rental income to calculate the taxable profit."

This is exactly my point, the argument is really can you define BTL as a business or an investment, you could argue a loan taken out to buy assets that are shares that generates a taxable income in dividends, providing capital for companies... In this scenario of buying shares interest is not off settable so why is the asset of a property treated differently.... I know all the other reasons etc, im just trying to look at it from both sides of the fence which is why I say its a grey area, I did muddy the water a little by adding in the management or not, this was more in my opinion it is on our side hard to define someone as an investor in the same way as buying shares if it requires a full-time or even part-time job to manage those properties.

Although I can see your point about buying shares, investment banks and hedge funds kind of show that you can argue it is a legitimate business, the difference is they do it in the shell of a company rather than an individual.

Totally agree with your advice which is why it is going to be very rare that an individual borrows money to invest in shares.

Like I say I think its a fine line, I think personally we are more a business because I manage my properties, I redecorate, I do most of the maintenance myself, I do all of this while not getting paid, which I think is kind of like owning loads of shares in Tesco and then having to go work there for free. I think this makes it a business and as such all the interest should be deductible and other measures should be used to reduce the risk of high leveraging. The argument is that you can pay someone to manage the let and do all the decoration and maintenance but I think thats kind of like a business owner employing an outside company to perform a task.