During his summer budget last year, Chancellor George Osborne announced changes to how landlords will be taxed. Being phased in over a four year period from 2017 these changes will see landlords being taxed on what they turnover rather than their profit. Eventually this will result in landlords being unable to deduct any interest from their rental income which at the present time allows them to deduct 100%. In addition to this there will be a reduction in the amount of tax relief they can claim on their mortgage payments. Currently the maximum amount is 45%, this will be reduced to just 20%.
There is speculation that these changes will see rents increase, and many landlords trying to sell properties before the changes are phased in resulting in tenants being forced to move out.
Whilst the changes have not gone down well with those investing in the ‘Buy to Let’ market it would seem others are making a legal challenge against the changes.
Wife of former PM, Cherie Blair QC, claims it breaches the human rights of landlords. Her law firm Omnia Strategy have sent a letter to HMRC setting out the points of their legal challenge. The Government has to respond within 14 days or the matter moves to a judicial review where a court will decide whether legislation is valid or not.
We were curious as to why Cherie would be raising the roof on this property matter and wondered if it could have anything to do with the amount of properties the Blair family own, many of which are let out as investments and worth millions!
We will keep you updated on the progress of this challenge so watch this space....