Disgruntled Buy to Let landlords have mounted a legal challenge against the Government’s proposed changes to the way in which their rental income is taxed.
In his first Budget after the election, George Osborne introduced measures increase the tax payable by Buy to Let landlords.
At present a property investor can offset all the interest payable on a Buy to Let mortgage, thereby reducing the profit made and therefore the tax payable.
However, Mr Osborne announced that the amount of interest which investors will be able to offset against income in the future will be limited to the basic rate of tax.
The measures will be introduced gradually, however the change will mean, in extreme circumstances, landlords paying tax even when they have not made a profit.
A legal challenge has been mounted and supporters hope the judicial review will overturn the new rules.
Two Buy to Let investors, Chris Cooper and Steve Bolton are leading the challenge and have already raised over £40,000 from other Buy to Let investors.
The challenge will claim that the new rules go against “a long-established principle of taxation that expenses incurred wholly and exclusively for the purposes of the business are deductible when calculating the taxable profits”.
The application for the judicial review must be submitted by 17th February 2016.
Buy to Let landlords hit again
Mr Osborne followed up his summer raid on Buy to Let investors in his Autumn Statement delivered just before Christmas, when he announced that from 2016 all Buy to Let purchases would attract an additional 3% Stamp Duty, on top of the amount that would normally be payable.
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