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The Government is being challenged to admit that the reasons for changing the way landlords are taxed are flawed.In a recent statement in Parliament, a Treasury Minister, Jane Ellison MP, argued that plans to restrict mortgage interest relief for landlords “will reduce the tax advantage landlords have over homeowners in the property market.”This assertion was rejected last year by Paul Johnson, Director of the respected Institute for Fiscal Studies, who said that the tax system “is not, and was not, even before the recent changes, more generous to people buying to let.” Unlike homeowners, landlords pay Capital Gains Tax when they sell a property, as well as paying income tax on their rental return.With a former member of the Bank of England’s Monetary Policy Committee highlighting that landlords would need to increase rents between 20 per cent and 30 per cent to cope with the extra costs of the tax changes, the Residential Landlords Association is warning that the policy risks considerable hardship for tenants based on false assumptions.The RLA is writing to the Office for Budget Responsibility to provide clarification on the tax burden on landlords compared with home owners.From this April, mortgage interest relief for landlords will begin to be restricted to the basic rate of income tax.RLA Chairman, Alan Ward said:“We are now weeks away from a tax change that risks investment in new homes, and will cause considerable hardship for tenants.“It is troubling that Ministers have not published any evidence to back up their assertions that landlords are taxed less heavily than home owners. This is no way to make policy.“We call on the Government to use the Budget this week to halt its planned tax changes which will do little to provide the new homes to rent they claim to want.”SEE ALSO - A million landlords forced to increase rentsUP NEXT - Rents to increase 15% by 2020 say BelvoirDON'T MISS - Tenant calls for Government to abandon Section 24NOW WATCH:
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
Introducing S24 retrospectively in no way helps to "level the playing field" between landlords and first time buyers, because the landlords have already bought and rented out their properties. Ask the government to qualify that!
cue rent controls being announced...
To utterly break the system?
I don't think Hammond is that stupid. Is he?
"Change is a prerequisite to longterm survival".
The establishment is rigged so that the rich stay very rich, and the poor get poorer.
It's not a matter of being stupid, it's a matter of spine, balls, courage, whatever you want to call it.
Hammond has little of those.
I am totally surprised Rent Control has not happened
If it was brought in it would have had a greater effect on BTL than S24
The threat from landlords has been to increase rents
Rent Control would remove that Threat
Learn Change and Adapt ?????
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I wish the MP and RLA good luck in trying to claim that taxation is unfair on Landlords whilst also complaining about the removal of interest relief that Owner Occupiers don't get. Hard to square that circle. Will they be complaining that Landlords have to pay tax on rental income too whilst forgetting that Owner Occupiers also pay tax on their own income from work.
It's a rubbish arguement and it won't do anything for the cause.
You make no sense. Where has anyone said that they should not pay tax on profit?
That's the whole point. We would like, as any other business, to have the tax we pay calculated on profit.
Why are you comparing apples with pears?
A baker is allowed to deduct the costs of materials from his income, to come up with profit. Are you suggesting that is unfair as everyone who isn't a baker has to pay for bread??
Makes sense to me. They are simultaneously doubting the assertion that Landlords have a more favourable tax treatment whilst asking to retain a tax treatment that OOs had taken off them. I don't think it's wise to open that can of worms.
Also nobody has said that LLs shouldn't pay tax on income. Likewise I didn't say that anybody had.
The trouble is we are not classed as a Business and never have been If we had we would pay NI on profits as the baker will on his /hers