What the New Tax Changes Mean for Landlords

As most of us in the residential property investment sector are already aware last Thursday saw the introduction of the first phase of a new government tax move to penalise landlords. Legislation cutting tax relief for higher earning landlords (those earning more than £40,000 per annum) will be phased out gradually over four years and replaced with a standard 20 per cent tax credit. Before April 6, higher earning landlords were able to deduct mortgage interest payments of up to 45 per cent from their tax bills. Like the 3% Stamp Duty on BTL and second homes, the new legislation is intended to hurt landlords in the pocket. And certainly, for some landlords, they’ll be paying more in tax than they make in profit. That’s because they’ll be charged on their full rental income (rather than just profit). Investor Steve Bolton, who led – and lost - a court challenge...
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Let It Be?

New rules on tax relief and loan affordability being implemented in April will hit the profits of many buy-to-let investors.It has been a strong decade for UK property prices and rental incomes. Despite a marked dip in the second half of 2016, rental prices have still risen by around 30% since 2010. (Back in mid-2016 that figure was closer to 40%.1) Low interest rates and regulatory tailwinds have encouraged many landlords to increase the number of buy-to-let properties they own, while the UK’s economic and jobs recovery has helped to keep rental demand buoyant.Yet the tide appears to be turning. New rules due to be implemented from April will phase out higher rate tax relief on mortgage interest for buy-to-let. The maximum relief for higher rate taxpayers will ultimately fall to 20% in 2020.2 The impact of the drop may be substantial.“The tax changes that will start taking effect from April...
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Londoner’s annual rent to increase by over £5,000 in next five years

  As the new buy-to-let stamp duty surcharge takes hold, and landlords look for ways to offset the additional expenditure they are incurring on new purchases and take the sting off the proposed reduction in tax relief that will come into effect from 2017. Londoners renting in the capital could be facing an average increase in annual rental charges of £5,3281 by 2021, equating to an average monthly rent of £1,965 – up from today’s current average of £1,521.2 Claire Hodges, who lets a studio flat in Greenwich, has found her rent has increased already this year.  She said: “I was originally paying £725 per month when I signed my contract last year however in February I was notified this would be increased by another £25 per month to £750 from April.  It may not sound like a lot, but it certainly makes a difference to me. “Unfortunately it’s difficult...
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The legal challenge to Osborne's buy to let tax change is underway

Cherie Blair, MBE QC, the wife of former Labour Prime Minister Tony Blair is representing a group of several hundred property investors.  They are lobbying against a tax increase which was announced by George Osborne in the summer. She argued that the human rights of buy-to-let landlords will be breached by a tax charge, in a legal challenge to the Government. A Judicial Review  of the controversial policy change has been called for by Mrs Blair's law firm Omnia Strategy LLP.  The policy change would restrict buy-to-let mortgage interest tax relief from April 2017. The case has been brought by two private landlords, Steve Bolton and Chris Cooper, who used crowdfunding to raise over £50,000 from 737 individuals including other landlords and letting agents that also think the policy is unlawful. You can download the pre-action letter that was sent to HMRC by their lawyers here. It outlines the case...
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Government are going to debate the petition!

Good news -  I recently have heard from Matthew Moody, that the Government are going to debate the petition that many of you have signed. Bad news - it's NOT to reverse tax relief on mortgages its to Scrap plans forcing self employed & small business to do 4 tax returns yearly! The issue we have is that they've got to this figure in about 6 weeks - we are still lagging on 53000 signatures. Although more organisations are coming on board with this. Everyone needs to sign this petition to stop small landlords being targeted at the expense of big business and help spread the word. https://petition.parliament.uk/petitions/104880 Reverse the planned tax relief restriction on ‘individual’ landlords  
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Emergency Budget Losers

LANDLORDS were given a nasty shock in Chancellor George Osbornes emergency budget earlier this month. In his first budget given as a Conservative rather than coalition chancellor, Osborne surprised property investors by scrapping mortgage interest tax relief at the higher levels. Buy-to-let owners were told they are to be stripped of the right to claim the tax relief at the 45 and 40 per cent tax bands. Kicking in from 2020, the change could have a significant impact on owners of multiple properties or those relying on rental income to pay outgoings. The surprise move caught landlords off guard in a budget aimed at encouraging home ownership rather than renting. Bank of England Base Rate With the Bank of England base rate still at its historic low of 0.5 per cent, the impact is likely to be minimal in the immediate future as returns on other financial investments are also...
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The Autumn Statement

We have been waiting with interest to see what George Osborne was going to say in his Autumn Statement today. Opening remarks The Chancellor says Britains economic plan is working but the job is not done, we need to secure the economy for the long terms and the biggest risk to that comes from those that would abandon the plan. He says We need a plan where we dont pretend we can make things better by writing cheques to ourselves. Forecasts show the growth is up, but growth in productivity is still too low, business taxes are still too high and exports are still too low.
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Barrister loses DIY tax scheme case

   The following is an article published in the ‘The Law Society Gazette’ on 12 April 2013 by Catherine Baksi. It highlights the fact that spurious tax avoidance schemes are looked at in detail and challenged by HMRC. Fortunately CAPITAL ALLOWANCES do not fall into this category as they are legislated for under the Capital Allowances Act 2001. As EXACT follow all of the HMRC rules and guidance on this tax relief, you can be assured of a successful claim. “A former London tax barrister who designed his own tax avoidance scheme has lost his tribunal appeal against HM Revenue & Customs. He was attempting to avoid paying £190,000 in tax. Rex Bretten QC designed a complex scheme which entailed setting up trusts and investing £500,000 in discounted securities. He claimed his scheme created a loss of £475,000, which he could set against his income. Bretten practised from Tax Chambers at 15...
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Cranleys Tax Update

  News this month: With the submission of late tax returns well behind us now, we still have a couple of late returns as clients were dealing with property maintenance matters ahead of filing returns. It is important to understand penalties do not stop at 31 January 2013. Old rules changed two years ago. Many will expect a £100 fine in 3 months late of filing and will get £900, it does of course worsen beyond this. DO not get caught out. The format for my new regular piece here is a modern take to a Q&A section. I would welcome your questions, here is a selection of my life on property tax matters. Views from my inbox: Q1. A friend of mine recalls his accountant mentioned you can reduce tax by buying a business, can this apply to a property business like mine? Garry Milton Keynes? A1. Garry, yes,...
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Interview with the Empty Homes Agency

  This is very interesting interview by PS Investor Services. With a UK property market considered to be at one of its relative lowest points for decades, the hunger for investors to build their portfolios is ever-apparent.   One potential acquisition strategy – that is often overlooked due to perceived misconceptions – is to look into properties that have been left empty by previous owners.  Please see an interview below with chief executive David Ireland of the Empty Homes Agency with whom we discussed current levels of empty properties in the UK; the effects of the recession on the situation; the housing deficit; the government’s response; what steps can be taken to investigate an empty home; seeking legal advice; available grants for renovating empty properties; getting advice from local authorities; the organisations’ campaign for council tax relief. 1) Can you explain what the essential role of the Empty Homes Agency is? Empty...
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Budget 2011 predictions regarding Capital Allowances

Thanks to Arthur Kemp, HMO Tax for these predictions on the budget tomorrow.
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Free Government Money - claim yours now!

I recently had the pleasure of interviewing Julie Jackson and Lisa Matterson of Global Cashflow.  They recently set up Global Cashflow to help people claim whats rightfully theres. Did you know you can claim capital allowance tax relief  on certain types of property?  It is your right to claim up to £100,000 per year in capital allowances. What I like about this is that if theres no claim theres no fee.  If you do claim, Global Cashflow only charge 5% + VAT of the value of new capital allowances identified.  They will also work with your accountant on this.  Basically the government are giving away free money!  Dont they say theres no such thing as a free lunch - however in this case I think there just might! It also sounds very easy and straightforward! You can listen to the short audio here by pressing the play button. [audio:http://www.justdoproperty.co.uk/wp-content/uploads/2011/01/rec_jaj1967_10_Jan_2011_20_08_21.mp3|titles=rec_jaj1967_10_Jan_2011_20_08_21] 96%...
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