On balance, one would have to describe this Budget as a bit of a 'nightmare' for most individual property investors with residential rental property. For some unknown reason, the Chancellor seems to have singled out property investors for some particularly harsh treatment.

The essence of the problem, I suspect, is that the Government completely fails to understand that property rental is not a passive investment. It is a business and deserves to be treated as such!

Interest and finance costs
In utter defiance of the basic principles under which businesses are generally taxed in the UK, the Chancellor proposes to restrict tax relief for interest and finance costs paid on residential property by individual landlords to basic rate only.

The Budget note on this proposal suggests that the Government's objective is to make the tax system 'fair'. To my mind, the measure would have been more appropriate if their objective had been to increase the level of homelessness in the UK.

The proposal is to phase out higher rate tax relief for interest and finance costs over a four year period commencing in the 2017/18 tax year (the year commencing 6th April 2017 and ending 5th April 2018). This will work as follows: