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TAX TIP TUESDAY: Potential 100% Tax Rise for Landlords as they are Made Housing Crisis Scapegoats

Our 5-minute read – Tax Tips – for UK doctors and dentists will help you save tax, get organised with your tax affairs and make sure you meet important deadlines with ease.


This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. The Financial Conduct Authority does not regulate tax advice. 


Landlords can’t seem to catch a break. Even after being subjected to a slew of regulatory headaches and tax legislation, it now appears that they’re being blamed for the housing crisis.

A recent report from the Institute of Economic Affairs (IEA), has stated the changes imposed by the government on buy-to-let property owners goes against “any basic economic analysis” and as a result, they believe that a massive reform in the way rental properties are taxed is in order.

The report even goes as far to suggest that landlords are being “discriminated against,” citing that after 2021 when the strict new rules come into effect, some will be dealing with a tax rate of more than 100%!


The knock-on effects of the tax changes

This of course will lead to an increase in rent to recuperate lost earnings and a drop in available rental units as these tough new measures may drive out landlords altogether. Instead, the market may flood with dodgy investors and with the oppressive restrictions on developers, new housing projects have all but come to a standstill.

Former Chancellor George Osborne introduced these severe new tax laws. Previously, landlords were able to offset their mortgage interest payments before calculating their income tax bill, but this is no longer the case. In a few short years, landlords will only get a 20% tax credit after tax is calculated.

The availability of rental homes has already declined due to the 3% stamp duty surcharge levied on the purchase of a second home. These new tax changes will leave landlords with a hefty tax bill they formerly didn’t need to deal with, and additional costs for purchasing additional properties. This will make the management and expansion of their businesses near impossible.

These new measures aren’t helping raise any capital at all for the government and have had quite the opposite effect. The IEA confirms that tough new laws contradict any logical tax policy and the government has no leg to stand on in defence.


What are the options for landlords?

There are options for landlords who wish to continue nurturing and growing their portfolios. Some have tried purchasing homes in new regions of the country, while others are considering holiday lets which still come with beneficial tax breaks (as long as you can adhere to other rules required of this type of rental property).


Are you a landlord? Speak to us

If you’re a landlord concerned about how the tax restrictions will affect your business, get in touch with us today. We can ensure you’re taking full advantage of all relief available to you so you can focus on turning a profit from your properties.


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