Summer Budget 2015 – Landlords Reactions

Reply to the comment left by "Paul Green" at "05/11/2016 - 20:38":

Hi Paul Green

I am not so sure Simon is right here unless they change the tax form. As you no doubt will have one box stating interest paid and another box for all your properties for rent received.

I believe as it stands you will end up paying tax on a property from what little profit you made on your other properties.

I hope I am wrong.

Reply to the comment left by "Dr Rosalind Beck" at "08/11/2016 - 15:36":

Hi Ros

It could simply be that Ms Walster believes the lie that George Osborne uttered about halfway through the Summer Budget last year:

“For the wealthiest, every pound of mortgage interest costs they incur, they get 45p back from the taxpayer.”

https://www.gov.uk/government/speeches/chancellor-george-osbornes-summer-budget-2015-speech

She may believe that landlords actually receive a cheque for up to 45% of their finance costs, as part of “Government spending”.

I wonder how many other people who have responsible jobs in the housing sector, but who are ignorant of accountancy and taxation, also believe this.

It might explain the mysterious claim that was made on TV in February by Betsy Dillner, Director of Generation Rent, that “These tax incentives have pushed a lot of amateur landlords into the market and removing these incentives will professionalise landlords and make way for FTB’s which may have been pushed out of the market because of these tax incentives pushing up prices.”

http://www.bbc.com/news/business-35681874

We all know it is a lie, of course, and that the truth is that hitherto we have deducted finance costs from our receipts in calculating our taxable profits, under Generally Accepted Accounting Principles, just like every other type of enterprise in the land.

The lie was even repeated in a letter from a Conservative MP that was posted on this thread a long
time ago. Very worrying.

I just got following Text message from a friend of mine:

I forgot to tell you I met with Philip Hammond new Chancellor in relation to Buy To Let Mortgage Interest Relief.

I initially wrote to him couple of letters and got fairly standard replies. As he is Runnymede and Weybridge MP, my mate who lives in his constituency also a landlord made an appointment to see him at his surgery so I went along with him.

I given him all facts and figures and showed him my current accounts and how this will change the whole game plan for me. He listened attentively and did not defend anything for 25 minutes.

At the end he said, we are listening and observing there May be...May be... few reforms during our Autumn Statement but I can NOT confirm what they might be. I pressed him further and said is it likely to be reversed? He said "please do not put words in my mouth, there MIGHT be some changes but do not expect rabbits out of hats".

At the end I tried to take selfie with him and he laughed and said...please. ? (meaning don't)

Reply to the comment left by "Appalled Landlord" at "08/11/2016 - 17:24":

In my experience, 99% of people I know (most of whom I'd think would be knowledgeable about basic business principles) don't even understand the rudiments of business. Most know what an allowance is from their own personal tax, few know about reliefs (if they were around when MIRAS was in force, something I think George Osborne played on), and maybe what profit is (but not how it is calculated).

So extrapolating this to the wider general public; I'd say 99.99% haven't a clue.

Reply to the comment left by "Simon Hall" at "08/11/2016 - 18:06":

Simon,

That's sounds very encouraging especially as PH has a background in property.

The NLA have just launched an email campaign for members to send an automated email to PH, I doubt many will get through but if his office/PA receives a few thousand then he might take note and do something.
If you or anyone else wants to send PH an email here's the link: http://rethinktenanttax.org/

"Also ask her to explain how disallowing business costs constitutes ‘Government spending’, as we don’t receive anything from Government."
I don't follow this line of reasoning. What we receive is a reduction in the amount of tax payable, which is a cost to Government and therefore part of their spending.

Reply to the comment left by "Neil Robb" at "08/11/2016 - 16:55":

Hi Neil,

Neil,I can appreciate that you think I might be wrong. However, to put this bluntly you will be Taxed on Gross Rental Income( Not On Interest) Minus 20% Tax Credit for your Mortgage Interest Payment therefore your ability to deduct Mortgage Interest Payment will be restricted as opposed to Taxing you on Mortgage Interest.

So, do you think if you paid £100K Mortgage Interest and did not make penny in Rent you would be Taxed on Mortgage Interest? Wrong.

You will instead get £20K Credit (I am assuming that it is 2020) which you can carry forward indefinitely and offset against your future profits. Bottom Line is contrary to popular belief More Mortgage Interest you pay less Tax you will have to pay. More Rent you get More Interest you will pay as your ability to deduct 100% of Mortgage Interest is restricted.

I am sure more experienced landlords like Barry and Appalled Landlord will concur with this.

Reply to the comment left by "Barry Fitzpatrick" at "08/11/2016 - 18:17":

Indeed!

Reply to the comment left by "Simon Hall" at "08/11/2016 - 18:51":

@ Simon

Spot on.

As you say it is a common misconception that if your interest goes up so will your tax, whereas quite the opposite is true (unless 20% of your interest exceeds your deemed rental profit).

Reply to the comment left by "Barry Fitzpatrick" at "08/11/2016 - 18:56":

Thanks Barry.