Buy-to-let tax relief legal challenge
The buy-to-let tax relief changes introduced for landlords in the Autumn 2015 statement, which we previously reported, are being fought by some landlords as an ‘unfair tax grab’ with concerns of the impact it may have on landlords and their tenants.
There is now a running petition by some 58,000 landlords (as of mid January), and a court challenge is due to be launched by a group of buy-to-let home owners to prevent the changes coming into force as proposed in 2017.
Currently landlords of buy-to-let properties can use a number of options to reduce their costs including full tax relief on mortgage payments, wear and tear allowance, and making the most of the current stamp duty options, allowing multiple properties to be purchased with no additional costs or restrictions on property numbers.
However under new proposals the following changes would be applied to landlords:
- Those with existing properties will face a 3% stamp duty increase on all additional properties (to be introduced in April 2016);
- Buy to let mortgage interest tax relief will be a standard 20% base rate rather than the 45% allowed previously for higher rate tax payers (to be introduced in 2017);
- Changes to allowable deductibles e.g. wear and tear allowances being replaced, and relief only being permitted when furnishings are replaced.
In the run up to the proposed changes, it is being reported that landlords have already been making changes to how their buy-to-let tax affairs are managed, including buying them through limited companies, however it is suggested these methods or ‘loopholes’ may also be tackled by Government.
If you are a buy-to-let property owner and need to understand the full potential impact of the tax relief changes currently proposed, why not get in touch with our team today for guidance on how to make the most of your buy-to-let property investment – call Harvey Telford and Bates Accountants on 01743 462604 or email [email protected].