According to a new survey carried out by Paragon Mortgages, 9 out of 10 landlords in the UK are desperate to persuade the Government to reverse the recent changes they made to tax relief on buy-to-let mortgages.
In 2015’s Summer Budget the then Chancellor George Osborne announced that, over a 3 year period beginning in April 2017, a series of changes would be implemented that would mean higher rate taxpayers would no longer be able to offset all of the interest on their buy-to-let mortgage/s against the rental income they received.
Paragon Mortgages’ study led with a pointed question asking what landlords felt the new UK Government should do first. The resounding and arguably predicable answer was that almost all of the landlords interviewed felt they should reverse this decision. Many also called for no further changes to be made until some much needed stability returns to the property sector.
As well as reversing the personal tax element, there was also a call for the new Government to exempt landlords from capital gains tax and stamp duty if/when they move their portfolios into a limited company. The study shows incorporation is a step 1 in 10 interviewees had already taken in a bid to minimise the impact the changes would have on their personal tax relief.
That figure however was overshadowed by the 20% of respondents who said they’d started to increase their rents to battle the effects the changes would have on their incomes while a similar proportion stated they now plan to sell parts of their property portfolios and not buy any more.
Interestingly the research also reported almost 90% of the landlords involved said they now fully understand exactly how the proposed tax changes will affect them, a rise of nearly 20% since the same audience were asked at the turn of the year.
However, although landlords may be more aware of the changes and their implications, they will continue to face a tricky time as the changes come into force. If you are a landlord the easiest way to ensure you manage the effects of the changes is still to take specialist advice from an experienced personal tax adviser.
If you are a landlord and have any questions on how these changes might affect your tax situation or your rental income - or have any other questions regarding your personal tax situation - please contact Jane Greenwood.