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 [email protected]

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

Estate Agent Talk

How can Cash House Buying Agencies thrive in 2022?

Like many other industries in the world, the UK property market is constantly evolving. Industry players therefore need to keep a keen eye on the key markers that define the state of the industry. As 2022 ushers in new changes and realities, industry players like cash house buying agencies need to arm themselves with current…
Read More
composite gates
Home and Living

Composite Garden Fencing / Gates – Pros & Cons

As much as many of us enjoy great relationships with our neighbours, we do also relish privacy between our properties / boundaries. Years ago I remember rows of gardens with no more that a wire fence with wooden posts separating each with some having missing sections and even those totally without. Many neighbours would have…
Read More
Breaking News

BREAKING PROPERTY NEWS – 30/06/2022

Daily bite-sized proptech and property news in partnership with Proptech-X.   Zoopla names new members of its Lettings Advisory Board, selected to support its goal to help inform how industry responds to a fast-evolving policy environment for agents, landlords and renters Zoopla, the UK’s most comprehensive property destination, is pleased to announce new members of…
Read More
Estate Agent Talk

Why Your Multifamily Building Needs An Access Control System

Being responsible for a multifamily building requires keeping safety a priority. Security can be a concern in a building with multiple people coming in and out, which is why your multifamily building needs an access control system. There are many reasons why an access control system can be of use to a dwelling with more…
Read More
empty property uk 2022
Estate Agent Talk

How many empty homes are there in England?

The total number of empty dwellings as at 13 September 2021 was 468,000 – a decrease of 11,000 or 2.4% on the previous year as quoted on the official government website: Local Authority Council Tax base England 2021 Long term empty homes are dwellings which are unoccupied for a period of 6 months or more…
Read More
Breaking News

New Research from TwentyEA Shows Available Stock Has Almost Halved Compared with Five Years Ago

Despite the fact that UK inflation has hit a fourty year high of 9%, agents across the UK are still seeing demand for properties outstripping supply, with new instructions largely flat during May, according to a recent RICS survey in June 2022. The RICS survey also suggests there is little prospect of more homes coming…
Read More