Two property developers, Steve Bolton, Chairman of Platinum Property Partners, and Chris Cooper are have raised £50,000 through a Twitter crowdfunding campaign to challenge Chancellor George Osborne’s planned tax changes for landlords. Under the Chancellor’s proposals, landlords operating as sole traders would no longer to be able to claim Mortgage Interest Relief when calculating their taxes.
Bolton and Cooper began fundraising towards the end of a Parliamentary Petition launched by the Residential Landlords Association titled: “Reverse the planned tax relief restriction on ‘individual landlords’ which argued that the Chancellor’s plans were unfair to private landlords and may result in higher tenant rents.
The Residential Landlord’s Association petition attracted 60,894 signatures, well short of the required 100,000 necessary for the motion to be considered for debate in Parliament which may leave Court action the only option to challenge the proposed tax changes. The motion did however receive enough support to merit an official response from the Government reiterating the Treasury’s support for implementation of the Chancellor’s measures. In its response the Government claimed that the tax changes were fair and merely removed tax exemptions for property investors which are not enjoyed by those in other asset classes.
Speaking about the Chancellor’s plans, Bolton stated “It’s not clear why the government has chosen to just launch an attack on buy-to-let owner-operators with mortgages. It’s a tax from Alice in Wonderland – truly absurd and divorced from real life. Not only is this tax grab unfair, undemocratic and underhanded, but we believe that it could also be unlawful.”
It is believed that the pair have sought legal advice matter from Omnia Strategy, a legal firm founded and chaired by Cherie Blair.
The Government has officially responded to a Parliament petition launched by the Residential Landlord’s Association. The petition seeks to challenge Chancellor George Osborne’s plan to reduce landlords’ ability to offset mortgage interest payments from their tax liabilities which were announced in the 2015 Summer Budget and Autumn Statement.
The petition titled “Reverse the planned tax relief restriction on ‘individual’ landlords” claimed that the Chancellor’s proposals to limit Mortgage Interest Relief for landlords operating as sole traders would unfairly impact their ability to conduct their business. Moreover the lobbyists claim that such restrictions are not denied to sole traders in other industries.
The Government responded officially after the motion obtained more than ten thousand signatures stating that it is committed to a fair tax system so it is “restricting tax relief landlords can claim on property finance costs to the basic rate of income tax.” Furthermore, the government asserts that the ability to reduce tax liabilities by offsetting mortgage interest and other finance costs against their property income is not available to ordinary homebuyers and those investing in other assets such as shares.
“By restricting finance cost relief available to the basic rate of income tax (20%) all finance costs incurred by individual landlords will be treated the same by the tax system. This recognizes the benefits to the economy that investment in property can bring but ensures the landlords with the largest incomes will no longer benefit from higher rates of tax relief.”
The government also states that the measures will only be introduced gradually over four years starting in April 2017 which will give landlords sufficient time to adapt to the new rules.
According to petition guidelines, a motion will be considered for debate in Parliament if it achieves over one hundred thousand signatures.
A landlord’s group has begun a parliament petition to challenge Chancellor George Osbourne’s plans to reduce Mortgate Interest Relief. According to the Chancellor’s proposals,, announced in his 2015 Summer Budget and reiterated in the Autumn statement that year, landlords operating as sole traders would no longer be able to deduct mortgage interest payments to reduce their tax liabilities.
The petition launched by the Residential Landlord’s Association claims that the proposed tax changes will increase costs for landlords and tenants as landlords seek to offset higher tax liabilities by increasing rents. The Association also claims that a report from the Institute for Fiscal Studies released in response to the budget indicates that individual landlords are taxed more heavily than other homeowners even before the Chancellor’s proposed changes come into effect in 2017.
The petition titled: “Reverse the planned tax relief restriction on ‘individual’ landlords” also claims that landlords operating as sole traders incur costs i.e. mortgage interest in the course of operating their business. The Residential Landlord’s Association, RLA, claims that Osborne’s measures will unfairly target such landlords since they would be unable to offset costs in the same manner as sole traders operating in other sectors. The RLA claims that the tax changes will not affect large institutional landlords and companies which buy their properties in cash. Other campaigners however claim that buy-to-let is offered significant tax advantages compared with investors in other assets such as shares.
In order to warrant consideration for debate in Parliament, a formal government petition requires a hundred thousand signatures and ten thousand for the government to respond officially. The petition deadline is 27th January 2016.