Section 24 tax grab?

Hi.
Firstly Michael, where are these houses please?
Secondly, New Yorker, I agree. The tax office for want of another name, never did recognize non limited landlords as a business! May I ask "New Yorker" was that your home? Don't need to ask, thanks

Surely you're not saying that S24 and the other measures introduced by George Osborne are another example of an ill-conceived tax grab which failed to take into account that interests rates can rise, as well as fall?

The adage that "you only pay tax when you are making money" no longer seems to hold true for landlords, particularly those with geared direct assets.

If the intention was to encourage landlords to hold properties in a company, (presumably to reduce tax evasion) then why did he not put a 5 year transition allowance on CGT to enable transfers without the risk of paying for poor advice followed by penalties?

SDLT - we now have to find an extra 3% cash in addition to our deposit, legals and refresh costs when we buy.
Oh, and if you decide to downsize and add capacity to the market by renting your old home, you still pay the 3%.

S24 - plenty has already been said on this. The only thing I would add is - how could they be so blind to the massive loophole that furnished holiday lets offers? Even if you sub out the management, the fees are probably covered by the tax savings plus you lose some of the AST compliance requirements and associated risk of penalties.

CGT - only residential property investors get to pay an additional 8%. Look I could understand if it was a labour chancellor looking to penalise smug second homeowners. Adding tax which is payable at a higher rate and accelerating the payment timescale, without offering some form of business reinvestment relief, simply removes capital which could have been reinvested in productive (taxable) assets.

Pensions - our rental profits do not qualify for tax relief. Many landlords in residential property, rather than investing their savings in a traditional pension fund (partly in response to the endowment mis-selling scandal) taking advantage of buy to let mortgages, on the unstated understanding that they were forgoing pension tax credit on their investment in exchange for having an income producing asset which would offer more flexibility than an endowment by providing an income in retirement with an asset which could be sold to fund long term care costs. The government were happy to abolish pension caps and raise contribution limits to keep consultants in the NHS. Surely they could give some tax relief to landlords, who provide safe secure homes.

and finally

IHT - many landlords feel trapped by the assets that were supposed to provide them freedom in their later years. With higher CGT and rising rents, some landlords may choose to hold on to their property, rather than sell at a discount in the current market. Doing so serves no purpose for beneficiaries, who have no incentive to retain the properties in the current hostile environment.

The one bit of good news:

Those of you who have not this week's King's Speech, will be pleased to hear that Gove's promised Leasehold Reforms are back on the agenda, offering:

- the end of leaseholds on new houses (hopefully the Lords will force this to be extended to all new homes, ie include flats)
- the removal of the qualifying period for extensions
- increase the standard extension period to 990 years
- cap on commissions and fees

iHowz have submitted a representation to the Chancellor for the Autumn Statement and continue to lobby for fairer tax treatment in addition to our Renters Reform Bill and other campaigns
https://ihowz.uk/category/campaigns/

Reply to the comment left by howdidigethere at 09/11/2023 - 23:06
Plus rocketing interest rates mean the effect of S24 is compounded.

Reply to the comment left by John Grefe at 11/11/2023 - 12:00
Yes, it was my home, but the equity meant I could remortgage (BTL), let it out in London for £40k pa, and buy a new home for cash outside London. S24 crashed that plan, so I kept it unlet for nearly 3 years until I sold it.

I'm just one, inconsequential landlord, but the actions of the government of the time have meant a loss of 8 beds to the PRS since S24 was enacted. Compound that for the many thousands like me or who have many more beds, and one of the main reasons for the housing crisis in the PRS is clear.