The Government has appeared unconcerned at the prospect of increasing numbers of landlords incorporating to get around buy-to-let taxation changes.
Several surveys have noted landlords forming companies for their property portfolios so they can continue to claim mortgage interest relief when it is scaled back for individual buy-to-let investors from April 2017.
Shadow housing spokesman Lord Beecham tabled a written question earlier this month asking whether the Government “intend to take steps to ensure that limited companies are not better placed than other landlords in relation to the taxation of profits engendered by letting residential properties”.
But responding on behalf of the Government this week, Lord Young said: “Using actual self-assessment data, HM Revenue and Customs estimate that only 1 in 5 landlords will pay more tax as a result of this measure. Given that only a small proportion of the housing market is affected by these changes, the Government does not expect them to have a large impact on rent levels.
“Incorporated businesses will continue to receive relief at the corporate tax rate. However, the rate of relief (currently 20%) is not more generous than the rate of income tax relief once these changes are fully in place by 2020-21.”
Comments (7)
Nothing then to do with wanting to keep the institutionals sweet, if they removed it for companies it would affect them.
Rents will rise but the government will blame anything but their own policies, they are well aware tha their policies will cause rents to rise again this is what they want for the institutionals. They need to keep share holders happy.
They can put as much spin on it has they like but you cant fool the people all the time and in the end the people will see.
All they are interested in is vote catching but I think they will be on shaky gound come 2020.
As they cut everything to the bone people will not be able to afford even social rents, Council tax will now be increased and what do we get ? We already pay for the services via tax and NI now we have to pay again via increased council tax.
Shame on this government it will not be forgotten. Ukip will be in the running 2020 if they up their game and appeal to the working and middle classes for fair policies, not ploicies that pave the path with gold for corporations , the elite and landlords who do not need a mortgage
In a world of uncertainty, movement of workers will be limited, social benefit caps and various other restraints, rents will go down (not up). The oversupply of new builds across London, with rents starting at 20% to 30% of market rates – the lack of corporate demand, will drive rents down across London. The side effects are the slow death of agents (as we are seeing) and amateur Landlords.
The government and corporate landlords are shooting themselves in the foot. They might need to rethink before it’s too late.
Not round here they’re not. I think you better head back to Never Never Land Peter
Heard of the ‘Trickle-down effect’. We also assess the less affluent and more deprived areas of London, and do not include in our analyst of the market, ‘Rent to Rent’, ‘Lease Options’, ‘HMO’, ‘Agent to Agent to Agent instructions’, where prices are lifted but services, standards and quality of properties drop. These are the things which the government are trying to eliminate.
Unless I’m mistaken, if your name is on the title deeds and you change this to an incorporated company, the company will be liable for stamp duty tax due to the transfer of title. This will only work if you declare yourself as a sole trader (to retain your title), but if you work elsewhere, this will complicate your tax returns. It looks like the government are keen to rid the UK of amateur Landlords (and agents). Good luck to them, it will be a very difficult ride over the next few years.
The point is that landlords are incorporating so that future purchases will be free of the restriction of mortgage interest relief. I know several landlords that are doing this and intend to increase their portfolios substantially in order to nullify the extra tax burden.
Yes if you are just starting to build a portfolio but for the landlords who hve large portfolios already this policy is to wipe them out