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Campaigning toolkit launched for Landlords to tackle taxation losses

RLA
Written by RLA

The RLA has launched a brand new campaign page full of tools to enable Landlords to lobby against the proposed tax changes announced by George Osbourne in this year’s summer budget. These measures included reducing the Mortgage Interest Relief for buy to let landlords to the basic rate (20%) and replacement for the wear and tear allowance for fully furnished properties with a scheme for tax relief only for actual replacement furnishing…

The RLA has launched a brand new campaign page full of tools to enable Landlords to lobby against the proposed tax changes announced by George Osborne in this year’s summer budget. These measures included reducing the Mortgage Interest Relief for buy to let landlords to the basic rate (20%) and replacement for the wear and tear allowance for fully furnished properties with a scheme for tax relief only for actual replacement furnishing.

The page lays out ways in which you can campaign against the measures along with the RLA by contacting your local MP and signing a petition on the Parliament website. The site also takes you to our tax calculator created by the RLA and Rita4Rent where you can work out exactly how the proposed MIR changes could affect your income.

The RLA has meetings set up with the Treasury and we are looking at putting together a proposal of alternative tax proposals to Number 11 on both Mortgage Interest Relief and Wear and Tear. We will be continuing to survey members to monitor the impact of these changes and we would appreciate your input so that we can present robust evidence to Government in our case against these changes.

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RLA

RLA

The Residential Landlords Association (RLA) represents the interests of landlords in the private rented sector (PRS) across England and Wales. With over 23,000 subscribing members, and an additional 16,000 registered guests who engage regularly with the association, we are the leading voice of private landlords. Combined, they manage almost half a million properties.

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  • I find it incredible the buy to let scheme was pushed through so that better properties to rent are available to the market. Such scheme was effectively “sold” to us ordinary mortals with certain tax breaks such as the ability to deduct the interest on the mortgage from our tax return and also 10% of the rent in wear and tear – now we are penalised by the government with regulations as long as our arm: smoke alarms, carbon monoxide alarms (that is on top of gas safe), replacement of perfectly serviceable gas hobs, complicated procedure affecting the tenancy deposit scheme, registration with the council to the tune of £350 per property etc. when will this stop? How are the landlords going to pay for all this? If we are out of pocket many landlords will have to SELL thus creating a shortage of good quality rentals – supply and demand will push up rental prices. It is not easy to be a landlord – most tenants are good people until you get landed with tenants from hell who will cause one aggravation after another just for the sake of it. It is not acceptable for the government to make such turn around and penalise landlords.

    • If we are only going to get tax relief on new goods, that seems to mean that we are being encouraged to buy new, and discard older furniture. In our little business we currently have a very good record of reinstating interesting, older pieces of furniture wherever possible. This is good news for the environment and also for our pocket.

      Does the government really want the “throw-away’ culture back? I expect furniture manufacturers do!

  • Great. Excellent page. I’m a bit worried though about the idea of presenting alternative proposals on the mortgage interest relief. I think the concept is completely flawed – we must be allowed to claim our costs as an offsettable expense. This was also stated by the Director of the IFS during the Treasury Select Committee on the Budget.
    As for alternatives, they would be completely different solutions to whatever problem the Chancellor is supposed to be addressing.
    e.g. if the problem is a shortage of housing for first time buyers, they have to build more homes. So policies which lead to that are the way to go. A completely different agenda is needed. Not compromise on something which again the IFS said is ‘plain wrong,’ and which Professor Philip Booth, economist and Director at the Institute of Economic Affairs at the same meeting said ‘didn’t make any sense.’ Also, Professor of Taxation at Oxford University, Michael Devereux said in relation to this: If you are trying to tax profit you have to give relief for the cost of earning it.’

  • I am delighted to read of this RLA.

    I will be representing landlords on behalf of Property118 at The Treasury worksops on the 18th and 24th August. I have been invited to consult on clause 24 of The Finance Bill Until today The Treasury have previously refused to consult on this proposal.

    One quick request to all – please stop using the phrase “Mortgage Interest Relief” and start calling it what it really is.

    The correct phrase, used by HMRC is ….

    “Restricting finance cost relief for individual landlords”

    “Mortgage Interest Relief” sounds like we are getting some sort of tax perk.

    All we are asking for is to be taxed on the same basis as all other businesses.

    Tax us on PROFIT!

  • Great to see the RLA campaigning against these changes. As a Landlord with furnished properties to meet the local market demand the loss of the 10% W&T allowance will result in a claim on tenant deposits for dilapidations which currently I do not charge as know this can be covered by the allowance. Changing to claiming against receipts is not only greater and administration load for the many small items but does not recoup the effort in sourcing and replacing items. Changing to unfurnished would not work in our local market. Responded to consultation along these lines.

    Also signed petition on Tax Levy and written to my MP

  • Surely it can not be any government’s intention to introduce a taxation system that is not based on the ability to pay. In fact this system may even levy tax bills on landlords who make a loss. This kind of “envy politics” is what you would expect from Corbyn.

  • The 10% allowance was generous and not entirely clear cut, so providing the new regimen will be allowance for ANYTHING (reasonable) spent, that would be fine by me. I have several Furnished Holiday Lets, and the tax arrangements for those are fine.

  • While I’m against “Restricting finance cost relief for individual landlords” (great name BTW !), I don’t see a problem with the changes to repairs and renewals.
    All of us who don’t let fully furnished already have to keep receipts etc, and it’s really not that big a deal if you are organised. But it actually changes the rules in our favour so we’ll be able to claim for things that we cannot at present – eg replacing a fridge or carpet.

    At present, “Restricting finance cost relief for individual landlords” won’t affect me, and for just about all reasonably foreseeable situations in the near/mid future that will remain the case. But I’m against it in principle for the reasons given – it’s a tax on sales without a corresponding relief on cost of sales like every other business gets.

  • This tax grab is a total shambles. I investing in property on the basis that I could offset all my operating costs against my turnover. If I knew this change would be introduced I would have invested into a pension instead. This goes against the very concept of operating a business! This is pure envy from some, and down right ignorance from others. It must be challenged.

  • Taking away thev”non receiptable” wear and tear allowance will discourage me from seeking out good quality second hand furniture because alot of it is not receiptable (car boots, local ads and gumtree etc). I can’t be alone so this new tax law will mean alot more of this stuff ends up in landfill. The government dont seem to know what they are doing. Giving energy efficient grants with one hand and destroying the incentive to recycle with the other!

  • I agree with Mark Alexander’s comments. Please stop viewing this new rule as somehow the withdrawal of a perk we, as landlords, are getting.

    This is not a perk. This is basic common business practice.

    I am in the business of providing rental property for tenants. I own a portfolio of properties.
    As such I have operating costs – a large part of which is the cost of the mortgages or loans I have on them. I am a sole trader. The rent I receive is my income.I have no other source of income.

    Any other UK business would be allowed to deduct its operating costs before paying tax on its income.
    If a manufacturer wants to expand its business by taking a loan to buy a new premise it is allowed to deduct the cost of the loan as a legitimate business operating expense. There is no difference.

    If the government suddenly told all manufacturers that they couldn’t deduct their loans as business expenditure, but instead would be taxed on their gross income then a large number of manufacturers would cease to exist.

    If “restriction of finance cost relief” is withdrawn then BTL will also cease to exist for all but those affluent enough to own property outright ,or for those who have another source of income. There just isn’t enough profit in it if you can’t deduct your loan expense.
    Also, I understand George Osborne would have you believe that ordinary householders are not being treated as fairly BTL landlords because of this so-called tax perk.

    WHAT RUBBISH !

    Ordinary householders don’t pay Capital Gains Tax on the profit on their own home when they come to sell – BTL landlords, for the most part, pay 28%.

    So why? What happens to fairness now George?

    As private landlords, if we are now to be treated as non-businesses, then perhaps we should also be campaigning to have our CGT bills abolished when we come to sell. You can’t have it both ways George.

    I believe the only difference between us and any other business is that the government does not want us to be viewed as legitimate business owners. Well that’s fine, but the effect is that a lot of us will sell up, house prices will fall, the rental market will shrink dramatically and rents will go through the roof.

    This new situation is not just about landlords. I fear for tenants too. I would urge any landlord to also make their tenants aware of what is going to happen and sign the government petition, as they will be paying the price of this too.

    I have written to my MP who tells me that the government wants to support private landlords as they are very important to the UK rental market.

    I don’t believe this.

    I believe they want sole traders like us out, to be replaced by large property companies. They might hurt a lot of us in the process but I don’t believe they care.

    It seems to me that all George Osborne is interested in is making a huge windfall tax – either by pushing us into being higher rate tax payers or raking in CGT when we’re forced to sell.

    Oh and do you really think that freeing up pension drawdown is all about giving us more money or freedom?

    No. This, in my opinion, is all about George Osborne focussing on bringing in a windfall tax again.

    I’m sure he hopes that many people will not be prudent or informed enough about how to handle drawing down their pensions to be tax efficient.

    I suspect he realises many will be tempted to drawdown a large lump sum to pay off debts or help their children buy a house etc and in doing so they will pay a nice one-off tax bill which will go straight to the Treasury.

    Clever eh?

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