The National Landlords Association (NLA) estimates that 440,000 UK landlords have now been forced into a higher tax bracket because of finance costs artificially inflating their income.
Steve Bolton, founder of Platinum Property Partners calls the withdrawal of tax relief from landlord mortgage payments ‘the tenant tax’. He adds that it “marks the introduction of new tax changes that threaten to seriously damage the UK buy-to-let market. Landlords will no longer be able to offset all their finance costs against their rental income before calculating their tax bill. In implementing these changes, the Government is breaking an age-old taxation practice and is forcing landlords to pay tax on part of their costs – despite no other type of business having to follow such rules.
“Landlords play an integral role in today’s property market. Rental demand is at an all-time high, and not just because many have been priced out of buying a home in their desired location. A growing number of people are choosing to rent because they enjoy the convenience and flexibility, and our increasingly mobile workforce requires it. The Government itself admitted in its recent white paper the importance of a fair and affordable rental market: yet by targeting landlords’ profits, these changes will inadvertently make renting more expensive for tenants.”