440,000 LANDLORDS TO BE FORCED UP A TAX BRACKET FROM APRIL 2017

More than four hundred-thousand landlords (22 per cent)* who pay the basic rate of tax will be forced into a higher tax bracket from April next year (2017) as planned changes to landlord taxation come in to force.

The changes, once fully phased in by 2021, will mean landlords will no longer be able to deduct mortgage interest payments or any other finance-related costs from their turnover before declaring their taxable income.

Currently, mortgage interest payments are one of a number of expenses that landlords can deduct as a business cost, including insurance premiums, letting agent fees, and maintenance and property repair costs.

However, while 440,000 basic-rate tax payers will be forced into a higher bracket, all landlords could be at risk of seeing their tax liability increase regardless of their existing rate of tax, with landlords in Central London (31 per cent), the East of England (30 per cent), and the West Midlands (28 per cent) particularly hit. A full regional breakdown can be seen below.

The amount by which landlords will be affected will depend on their personal circumstances, including whether or not they generate income from any other sources.

Landlords’ tax liability will increase depending on their existing annual mortgage interest payments, which are broken down by portfolio size below**.

  • Single property – £3,600
  • 2-3 properties – £8,600
  • 4-5 properties- £16,300
  • 5-10 properties – £18,200
  • 11-19 properties – £24,900
  • 20+ properties – £38,000

The news comes as the National Landlord Association (NLA) met with Housing and Planning Minister Gavin Barwell to discuss the matter.

The NLA also hopes to meet Financial Secretary to the Treasury, Jane Ellison, in the near future after Chancellor Phillip Hammond responded to the association’s request to discuss the forthcoming changes, and last year’s stamp duty surcharge on addition property purchases.

The Financial Secretary is responsible for strategic oversight of the UK tax system including direct, indirect, business, property and personal taxation.

Richard Lambert, Chief Executive Officer at the NLA, said:

“When the Government announced these changes last year, it claimed they would only hit a small proportion of higher-rate tax payers.   We now know that is complete tosh.

“The Government must look to amend these tax changes and minimise the impact on landlords and their tenants – something that could easily be achieved by applying the rules to only new loans written after April 2017.

“Unless this happens, landlords will face an impossible decision of whether to increase rents and cause misery for their tenants, or to sell-up, and force their tenants to find a new home”.

From: Sam Haidar sam.haidar@landlords.org.uk

Christopher Walkey

Founder of Estate Agent Networking. Internationally invited speaker on how to build online target audiences using Social Media. Writes about UK property prices, housing, politics and affordable homes.

You May Also Enjoy

Breaking News

Popping the Asking Price Bubble

Where in the Uk Can Buyers Snap Up Property Bargains and Where Properties Go for a Premium Above Asking Price   New research from fast selling property company, Upstix has uncovered the UK’s most surprising postcodes for snapping up a property at bargain prices this year, highlighting a widening gap between sellers’ expectations and the…
Read More
Rightmove logo
Breaking News

Highest demand to lease office space since pre-pandemic

The latest insights from the UK’s number one commercial property website Rightmove, reveals that the number of unique enquiries to lease office space is at its highest point since pre-pandemic, as businesses look for spaces that meet modern requirements. Demand to lease office space is 19% higher than the same period a year ago and…
Read More
Planning disputes on new build land
Estate Agent Talk

Planning consultations for major infrastructure to be streamlined

Robert Bruce, a planning and infrastructure partner at law firm Freeths LLP, said he: “Welcomed the change as a significant step to speeding up the DCO process and the focus on the quality and effectiveness of the consultation, rather than box ticking and a risk averse approach to pre-application consultation due to the current legal…
Read More
Breaking News

‘The property ladder pulls further away’ warns Open Property Group

For many first-time buyers across England, the dream of homeownership continues to slip further out of reach. Despite rising wages, soaring house prices are making it harder than ever to get on the property ladder. A leading UK professional house buying company ‘Open Property Group’ based in Buckinghamshire UK, has raised concerns over the ongoing…
Read More
Estate Agent Talk

How Long It Takes to Buy a House in the UK: 5 Common Delays That Can Slow Down Your Home Purchase

Wondering how long it takes to buy a house in the UK? The average timeline ranges from 8 to 22 weeks, but even that can stretch significantly due to unexpected delays, especially if you’re a first-time buyer or caught in a chain. That’s why working with experienced professionals like Belvoir — one of the UK’s…
Read More
Love or Hate Rightmove
Breaking News

Rightmove to host Renters’ Rights Bill webinar with Guild of Lettings

Rightmove is hosting a live and interactive webinar session with the Guild of Lettings to help agents get Renters’ Rights Ready. The webinar will take place from 10:00am – 11:00am on Wednesday 23rd April. Susie Crolla, Managing Director for the Guild of Lettings, will be joining Rightmove to help agents with questions they may have about…
Read More