The changes proposed in Section 24 of the Finance (No.2) Act 2015 will stop buy-to-let finance costs (largely mortgage interest) being a claimable business expense. This means that most landlords with mortgages will now have to pay tax on their turnover rather than their profit and no other business in the UK is treated in the same manner.
Many landlords will have to pay extra tax of 20% or more of their mortgage interest payments. The tax they pay might be greater than their real profit, leaving them with a rental loss and a cash shortfall. This tax will only affect individuals who own rental properties in their own names, like the millions of smaller landlords in the UK. Companies owning buy-to-let property and wealthy cash investors are excluded from the tax.
Co-claimants Steve Bolton, Founder of Platinum Property Partners, and Chris Cooper, a fellow landlord and airline cabin crew member, are pursuing a Judicial Review of this legislation against the Government and HMRC. They are represented by law firm Omnia Strategy LLP, led by Cherie Blair MBE QC.
Axe the Tenant Tax is challenging the proposed tax changes on the basis that Section 24:
• Is a failed tax experiment from Ireland where rents increased 50% in three years and was scrapped by the Government as a result
• Is an unfair tax on tenants and non-corporate landlords and will distort market competition
• Will increase rents substantially
• Is a bad tax policy that breaks Generally Accepted Accounting Principles (GAAP)
• Will make the UK housing crisis worse
The result of the permission hearing will be issued on Thursday 6th October.
