Summer Budget 2015 – Landlords Reactions

Goodness gracious me.

Appalled and Simon. I don't have the interest in fighting with you - please stop being spiteful it does not enhance your argument or position and frankly is rather childish & silly. No one has to agree with me. As a matter of fact, GAAP is in reality where the Tenant taxes are concerned an argument just between us on this forum... cos aint no-one else listening!.

My opinion on GAAP and to that end, anything, is immaterial. Because we have law which has received royal assent and that law says GAAP where landlords is concerned is non existent. Am i happy - No.... Is it a fact - Yes.

if it helps you in any way, I am a landlord and my tenants like every Tenant will be significantly adversely affected by the Tenant Taxes. I think small landlords are a huge part of the fix not the problem and I like you hope that the Chancellor will reverse the Tenant Taxes.

However

I like to think I have the serenity to accept the things I cannot change; courage to change the things I can; and wisdom to know the difference.

Good day gentlemen!

Reply to the comment left by "Markb " at "17/11/2016 - 11:26":

Hi Mark

You say that :
Quote
" HMRC that say buying property is investment activity not business activity (forgive me if my wording is slightly wrong) the principal is however that changing BTL form investment to business activity will come though law change not moaning or being spiteful to me"
Unquote

Please see the case of : Elizabeth Moyne Ramsay v HMRC [2013] UKUT 0226 (TCC) the Upper Tax Tribunal

Plus a further extract from 'UK Tax Bulletin’ which states :
Quote
We know from the Upper Tribunal in the case of Elizabeth Moyne Ramsey v HMRC [2013] UKUT 266 TC that a business for this purpose can include the letting of property providing it is a serious undertaking earnestly pursued with reasonable continuity on sound and recognised business principles – and the activities were of a kind that are commonly undertaken by those who seek to profit from them.

Unquote

I believe that there have been a couple of other cases - that have all ruled against HMRC - As per the above.

The misconception that " One hat fits all Landlords" is also wrong. Yes some Landlords with just one or two properties may have used property solely as an investment vehicle, However the majority of portfolio Landlords (like my-self - I have 15 properties), are running a Business.

My business provides, high quality, short to mid term accommodation inclusive of all bills & sometimes cleaning services (occasionally we further provide, things like bedding & Towels & all kitchen utensils). This is somewhere between holiday lets & serviced apartments. My tenants are mainly Students or young (recently graduated ) professionals - namely in the medical profession (i.e. Doctors, PHD Scientists, IT professionals etc) who are on short term fixed contracts or placements (anywhere from 3- 12months).

When my partner & I started our business (almost 17years ago), just like most other businesses we did extensive research & had a short, medium & long term business plan. We further took independent advise as to weather we should in-corporate or not. As Buy-to-let was not then available to Limited companies ( It is now)- We were advised that there would be no benefit what-so-ever for us or our tenants if we were to incorporate.

In-fact in-corporation would have meant that all of our base costs would have been much higher (i.e. corporate lending costs @ higher interest rates, additional accountancy costs & also additional banking costs etc), & therefore we would have had to charge our tenants More. SO WE WERE SPECIFICALLY ADVISED AGAINST INCORPORATION.

It is also a mis-conception that Property is always an appreciating asset. Although this may be true in the South of England - it is not always the case in the Northern Counties. Large properties ( if not maintained regularly) can in-fact depreciate rapidly & sometimes the high cost of maintenance), for example when a new roof is needed or rotten joists, woodworm or damp problems need solving can mean that the costs of maintenance will be more than the value of the property.

S24 as well as the removal of the wear & tear allowance is Plain wrong as it will only really apply retrospectively, anyone starting the same business now would do exactly what we have done but under a Limited company.

Wouldn't waste anymore time on this with him he's got his misguided opinion which he's entitlied to

Reply to the comment left by "Sunita Rickman" at "17/11/2016 - 13:22":

Understand and agree that is what i did and think too. However we have to invest in changing our brand in society generally so people like us a s a profession and change the law to properly recognise that what we think is a business, is legally a business.

I could Ramsey my way in to incorporating but don't believe i should for all of there reasons you give and because i will not hide or run... I set up properly like you appear to have done and I will continue to do so.

Reply to the comment left by "Markb " at "17/11/2016 - 12:54":

You have mis-quoted

"I like to think I have the serenity to accept the things I cannot change; courage to change the things I can; and wisdom to know the difference"

The actual first paragraph of Reinhold Niebuhr's 'Serenity Prayer is :

God, give me grace to accept with serenity
the things that cannot be changed,
Courage to change the things
which should be changed,
and the Wisdom to distinguish
the one from the other.

He later goes on to say to God:

"Trusting that You will make all things right, If I surrender to Your will"

The one very vital word that you have omitted in your quote is the the word 'SHOULD'
i.e. "Courage to change the things which SHOULD be changed,"

Its a good job that the Suffragettes, didn't follow Niebuhr's theory & left it up to GOD to make all things right !!???

Reply to the comment left by "Sunita Rickman" at "17/11/2016 - 13:22":

Sunita, have you considered incorporating your portfolio now?

I would recommend and hour with mark smith for anyone with a decent portfolio he's a top bloke and has some good solutions if this goes ahead there's nothing to loose especially if u are in a partnership .

I am waiting till April before pushing the button on my existing portfolio (70)and have set up another ltd company which is -"actively buying and getting some great deals always opportiniuties especially when others are sitting on there hands 'be greedy when others are fearful' and all that ? Not that I like the word greedy but it was a famous saying

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

AL, let's assume when I decided to be a landlord I asked a wealthy friend to fund me with a million pounds to buy property and said I would pay him 5% p.a. on the money, if this was as a loan then I would be able to offset the interest cost before tax. If I said I will issue him with shares and pay that 5% as a dividend then I would not be allowed to offset the 5% paid to him as an expense. Both are used to purchase property but the cost of the funding is treated differently for tax purposes. I cannot see why they should be treated differently.

I did not say people should only borrow to buy deprecating assets, the comment was if the money was borrowed to buy an asset that normally appreciates in value I can understand it being treated as an investment and on that basis tax relief not being allowed.

Assumptions assumptions it's fundamentally wrong to tax debt end of story the whole economy would grinde to a halt if all businesses where taxed this way what about when a business 'invests' in plant machinery or office space is that a cost to business or and investment u are spouting the political tosh that buy to Let isn't a business it's pure nonsense end of story

Reply to the comment left by "NW Landlord" at "17/11/2016 - 14:25":

In the words of the Institute of Chartered Accountants of England and Wales (an organisation not affiliated to landlords in any way and also one which I would say stands to gain from the complex and chaotic tax returns which s24 will result in):

‘The idea that landlords will be taxed on the profit of their businesses, but not be allowed to offset the costs of creating that taxable profit is absurd, unjust and unsustainable. It overturns a fundamental, centuries-old principle of taxation.’
‘