Summer Budget 2015 – Landlords Reactions

It is not relief it is a legitimate cost of running your business this word relief does my head in how is it relief to deduct finance costs to calculate profit as all other businesses are allowed to do,so why not property ? Makes no sense

Most landlords will own there own houses they live in which are treated the same. You can't compare your own house with investment properties ran as a business

It doesn't bother me that some people identify it as a cost of running a business and some that it is a tax relief on a business expense, even with the latter it means that the subject is being talked about and more people will start to understand the implications.

In my view it doesn't help to call them investment properties but we all have our own terms for describing the properties and the tax situation.

Reply to the comment left by "Rajesh Hiremath" at "29/02/2016 - 12:01":

@Rajesh

You are clearly not a businessperson. Using your logic, for example, would mean taxis should not be able to to claim as a business expense the fuel they use because you as a consumer do not get tax relief on the petrol/diesel you buy,
Restaurants should claim the cost of food bought in as a business cost because you as a consumer do not get tax relief on the food you buy.
Businesses should claim the cost of electricity bought in as a business cost because you as a consumer do not get tax relief on the electricity you use.

The list is endless.

The fundamental principle of ALL business is that you get taxed on the profit you make, which is the revenues less legitimate business expenses (which includes loan interest).

Another cost is tax (on net profit); so if the Chancellor increase fuel duty (tax by any other name) on petrol/diesel by 1p/litre guess what happens to the price at the pump? Yup the price goes up 1p/litre; but who do you blame for this increase the garage owner or the Chancellor? This is why increasing the taxation on a lettings business will increase the rent that Tenants wll have to pay, if local market conditions don't allow a rent increase then the Landlord will probably sell and have to evist the Teants as a result. BUT don't blame the Landlord blame the guy who has increased the level of taxation.

Reply to the comment left by "Barry Fitzpatrick" at "29/02/2016 - 12:52":

According to the BTL association survey 76% of the landlords own BTL property and they pay basic income tax at 20%. Hence, it should not affect them. Only those landlords who own BTL properties and come under higher income tax bracket have to pay little bit more tax. Over all it is fair. Higher earners (rich landlords) will pay more which is the basis of taxation. You must thank Mr Osborne for not removing the tax rebate altogether. Let us not be too much greedy. Leave some profit to the nation.

Reply to the comment left by "Rajesh Hiremath" at "29/02/2016 - 13:28":

Rajesh, you clearly don't have a clue regarding this whole discussion.
May I recommend that you start reading this thread from page 1?

Rajesh, you're talking rubbish.
I, like all other businesses, pay tax on my profit. My profit is calculated by taking my income, deducting the cost of generating that income and paying tax on the difference. That is fair.
What Osborne says it that all individual landlord income will be taxed regardless of what it cost to earn the income. That is illogical and unfair and discriminatory.
What do you do for a living?

With all due respect u are armed with in correct information many basic rate tax payers will automatically become higher rate tax payers like myself without their income increasing. So you think it's fair to tax debt that has been paid out to the lender whist large corporate landlords and companies are allowed to deduct these costs. Anyone who thinks it's fair to do this is deluded or one of those shortsited jelous landlord bashers who have no explanation as to why they think all landlords are greedy parasites taxing debt has never and will never ever be fair

Conservative Party Hypocrisy

Source:Accountingweb.co.uk

Cast your mind back a year to the pre-election period when Conservative politicians were promising not to raise taxes. On winning the election they met that promise by legislating for a tax lock which froze the rates of income tax, VAT and class 1 NIC for the extent of this Parliament. Corporation tax rates are set to reduce to 18% by 2020.

If the main taxes can’t go up, what does a politician do? Raise money in other ways of course, and hope no one notices those sneaky new taxes. Here is the evidence.

Tax tribunal fees

The Ministry of Justice is advocating fees for taxpayers who challenge HMRC decisions at the tax tribunal. Currently the taxpayer pays no court fee to have their appeal heard.

The proposed fees will start at £50 to list a basic case, rising to £200 for complex cases. If the hearing goes ahead, the taxpayer will have to pay up to £1,000 and further fees in order to appeal to the Upper Tier Tribunal. These costs will only be refunded to the taxpayer in very exceptional circumstances; for example, where HMRC’s behaviour has been unreasonable.

Probate fees

In order to active a deceased person’s will, the executors of the estate need to apply for probate and pay a registration fee of £215. This fee currently applies where value of the estate is £5,000 or more. The Ministry of Justice wants to increase that fee threshold to £50,000, but also raise the minimum fee to £300. This may relieve 57% of estates from paying any probate fee at all, but larger estates will pay fees on a sliding scale of up to £20,000 for an estate valued at £2m or more.

Apprenticeship levy

The Government wants employers to fund more apprenticeships. The logical way to do this would be to increase employer’s class 1 NIC. However, the tax lock has blocked any increase in class 1 NIC.

Instead the required funds will be raised via the apprenticeship levy. This will apply from 6 April 2017 at the rate of 0.5% of employees’ wages, calculated in exactly the same way as employer’s class 1 NIC. The apprenticeship levy will be reported in a new box on the RTI returns and every employer will have a £15,000 allowance to set against the levy. The net effect is that only the largest employers will pay the apprenticeship levy, but every employer will have to calculate the levy and claim the allowance.

The self-employed will not pay the apprenticeship levy, but they may well pay increased rates of NIC from 6 April 2017, or whenever class 2 and class 4 are combined.

SDLT supplement

Stamp Duty Land Tax (SDLT) was not included within the tax lock, so the Government is free to raise the rates or reduce the thresholds. The new SDLT supplement does both of those things, by imposing a 3% charge on the entire purchase price of a second home, or on any residential property acquired by a company from 1 April 2016.

Second homes in Scotland will be subject to a similar land and buildings transaction tax (LBTT) supplement, also imposed at 3% on the entire purchase price from 1 April 2016. The exemptions from the LBTT supplement mimic those for the SDLT supplement. For instance, neither supplement will apply to properties worth less than £40,000.

Dividend tax

Income tax rates were frozen by the tax lock, so the Chancellor can’t increase income tax on dividends. His solution was to invent a new tax: dividend tax, which operates like income tax, but only applies to dividends in excess of £5,000 per year.

Thus the UK tax system becomes encumbered by three more taxes, two more allowances, and two more sets of compulsory fees.

And don't believe every survey etc that's out there because they are small samples and I find that a lot of commentators / journalists etc dont have a clue what they are talking about when it comes to our industry. The only way to understand the market is to be on the ground managing properties yourself that's when you get to know the challenges of being a landlord because I can assure you it is a difficult job that you can't switch off from and the last thing we need is fools in London trying to tamper with an industry that doesn't need fixing

Reply to the comment left by "Stewart Jackson" at "29/02/2016 - 13:38":

I own a BTL property and come under higher tax backet. I still think this tax is very fair.