It’s still possible to beat the tax changes
Private landlords and organisations in Peterborough working in the private rental sector have one last chance to challenge the discriminatory tax relief restrictions proposed by the government: a new campaign is hoping to take the legislation to Judicial Review.
The new tax rules will restrict the amount of tax relief landlords can claim on finance costs to the basic rate of income tax. Currently landlords can claim relief on 45% of finance costs but by 2021 this will be capped at 20%.
The finance costs restrictions will unfairly target landlords with portfolios who provide a vital source of much-needed rental homes. The wealthiest landlords who are able to cash buy or who have no mortgages will be spared.
The tax hike on private landlords could have many knock on effects including a huge reduction in the amount of available rental stock. As the population increases; the demand for housing increases, but due to the unaffordability of property investment, private rental stock will fall. Rents are very likely to rise as landlords are forced to increase rental income to afford higher tax bills.
For many landlords, having rental properties is an important source of extra income; an alternative to a pension or for professional landlords it is their sole livelihood. Finance cost relief for landlords isn’t a tax advantage; it is a normal accounting principal: expenses incurred wholly and exclusively for the purposes of business are deductible when calculating taxable profits. It is for this reason that Belvoir are backing the campaign to bring Clause 24 of The Finance Act 2015 to Judicial Review.
You Can Help to Take Action
- The first stage of the campaign is to raise £15,000 to fund a specialist legal team. A detailed Legal Opinion from specialist legal counsel is necessary to instigate a Judicial Review. Omnia Strategy LLP, established in 2011 by Cherie Blair CBE, QC, has been appointed.
- The team of specialist lawyers will advise fully on the merits of a judicial review case and the likelihood of success. This will take the form of a detailed analysis of the legal position and the production of full written Opinion.
- A further ‘stretch target’ of £35,000 has been added, which will be used to fund the next stage of the process. The legal team have already given an indication of possible lines of attack.
- After this fund-raising round has been completed and we have received the written Opinion, the aim is to push ahead and take this matter as far as the Judicial Review process will allow.
As individuals and business involved in the private rental sector; who depend up on rental income; and who provide much-needed rental property, we must do everything we can to challenge this legislation. Bringing this discriminating taxation change to judicial review is our last chance to overturn the legislation to save our profits and properties.