Edinburgh City Council is very excited about Rent Controls

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Edinburgh City Council is very excited and pleased with itself. It has just approved action with a view to implementing rent controls. https://www.commonspace.scot/articles/11326/hope-future-cross-party-rent-controls-breakthrough-edinburgh-city-council It is possible that once this is established in Edinburgh other councils may follow suit and, as we all know, it is quite likely the idea could then catch on down south…. Read more

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Two Thirds of Landlords pay basic rate of tax…

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Landlords’ Tax:

According to new information published by the Residential Landlords’ Association (RLA), two-thirds of individual landlords pay income tax at the basic rate income tax, the facts spelled out by data released by the Government.

Income Tax rates and bands 2017-2018

The Residential Landlords Association (RLA) says that this information “challenges the myth that landlords have large incomes and so can cope with tax rises.”

According to the figures obtained in response to parliamentary questions from DUP MP, Jim Shannon, of the just over 1.9 million unincorporated individual landlords returning a self-assessment tax return, two thirds were in the basic rate bracket, thirty per cent were in the higher rate band and four per cent paid the additional rate.

The Treasury Minister, Mel Stride MP, also confirmed that landlords are taxed more than homeowners noting that they pay tax on their rental income, extra stamp duty and capital gains tax unlike home owners, killing off assertions made by the former Chancellor, George Osborne, that tax rises on private landlords were about levelling the playing field with home owners.

Although in another answer the Treasury re-asserts that it estimates only one in five landlords will be affected by the reduction in mortgage interest relief, it confirms that it has no idea how many properties, and therefore tenants, will be affected by this additional cost pressure.

The figures come after David Miles, a former member of the Bank of England’s Monetary Policy Committee, recently warned that tax rises on the private rented sector will serve only to “cost” tenants.

Given that the need for more homes to rent is more acute than ever, the RLA is calling for the Government to scrap the decision to tax a landlord’s turnover, rather than profit, abandon the mortgage interest relief changes and to no longer apply the stamp duty levy on additional homes where a property is adding to the supply of housing available to rent.

RLA Chairman, Alan Ward, commented:

“The previous Chancellor increased taxes on the private rented sector based on what are now clearly false assumptions.

“It is especially worrying that Ministers cannot tell how many properties, and therefore tenants, could potentially be adversely affected by their policies.

“We need more homes to rent to meet growing demand. It is time that the tax system encourages rather than stopped housing growth cold dead.”

The RLA represents over 50,000 private sector residential landlords in England and Wales.

Jim Shannon MP (DUP, Strangford) asked the Treasury:

1. How many people declaring an income from letting out property pay the (a) additional, (b) higher and (c) standard rates of income tax; and
2. What was the total tax collected from declared income from residential rental properties was in each year since 2010-11?

The Financial Secretary to the Treasury, Mel Stride MP, responded:

“The government is unable to produce an estimate for the total tax collected from declared income from residential rental properties. This is because income tax receipts cannot be allocated to individual income sources. Individuals may have multiple income sources but pay tax on their total income subject to income tax, after deducting their tax allowances. These allowances and tax rates are not applied to income streams individually but to total taxable income.

“The table below provides a breakdown of the number of individual unincorporated landlords by their tax brackets on the basis of the 2014-15 self-assessment returns. Figures in the table reflect outturn data on landlords’ total incomes subject to income tax which includes, among others, rental incomes.

Number of individual landlords by marginal rate, 2014-15 (rounded to nearest thousand)

Basic rate – 1,254,000

Higher rate – 584,000

Additional rate – 82,000

3. What taxes related to property are paid by (a) unincorporated residential landlords on properties they rent out and (b) owner occupiers?

The Financial Secretary to the Treasury, Mel Stride MP, responded:

“Unincorporated residential landlords are chargeable to income tax on the profits of their rental business.

“A landlord who buys a property is liable to stamp duty land tax on the purchase price. A landlord who sells a rental property will pay capital gains tax on any increase in the value of the property.

“Unincorporated residential landlords will not usually be registered for VAT as domestic lets are exempt from VAT.

An owner occupier would be chargeable to income tax on any rental income from their property. An owner occupier would also pay stamp duty land tax when they buy a property.

“An owner occupier would not pay capital gains tax on the sale of a property that had been their main residence for the whole period of ownership, as this would be exempted by private residence relief.

“Owner occupiers would usually be liable for council tax.”

4. How many rental properties will be affected by changes to mortgage interest relief being phased-in since April 2017?

The Financial Secretary to the Treasury, Mel Stride MP, responded:

“Using self-assessment data, HM Revenue and Customs (HMRC) estimated that only 1 in 5 landlords will pay more tax as a result of this measure. No estimate has been made specifically about the number of properties that will be affected by this change. This is because taxpayers currently do not inform HMRC how many properties their finance costs relate to.”

See Also:

Landlords’ Tax is “profoundly wrongheaded”

Time to look again at the Landlord Tax says IDS

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The New LandlordZONE Website Launched Today…

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Today, Wednesday the 12^th of July marks the launch of the new LandlordZONE® website.

Welcome to our brand new, slimmer, faster, state-of-the art website.

After 17 years and 5 website generations LandlordZONE® continues to serve the private rented sector and the UK landlord community.

We hope you enjoy using all the new features…

Remember, the LandlordZONE® FORUMS represent just one small part of an encyclopedic website resource, with over 500 thousand pages of content – news, information, comment, Suppliers’ Directory and free document downloads.

Advertisers – see the new Media Pack:

www.landlordzone.co.uk/pdf/LandlordZONE-Media-Opportunities.pdf

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Call of the week – Notice to Quit from a landlord

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For most landlords, the only tenancy they will ever need is an assured shorthold tenancy.  This is the standard, and it is rare to find yourself in a situation where you would have a different type of tenancy. So most landlords become familiar with notices under section 21 or section 8 but rarely need to […]

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TDS Charitable Foundation report

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The Tenancy Deposit Scheme’s charitable foundation has released a report ‘How do we stamp out damp, condensation and mould in the private rented sector?‘ Kate Faulkner of designsonproperty.co.uk was provided a grant by the TDS to write a series of reports (this is the fourth) for the private rented sector designed to increase knowledge and… Read more

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Is there a problem seeking possession whilst I am living abroad?

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Is the procedure any different when seeking Possession of Property whilst I am living abroad ? I have served a section 21 notice on tenants living in one of my properties in the UK. They have been unable to find affordable alternative accommodation. They have approached the Local Council who have not classified them as… Read more

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What do you think of HMRC’s invitations?

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I assume I’m not the only Property118 reader who receives emailed offers of ‘help’ in the form of invitations to webinars from HMRC. And I guess I’m not the only one to be irritated at being addressed as “Dear customer”, as if I have a choice. If I had a choice I might choose to… Read more

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Why do you need a landlord’s insurance policy?

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Landlord’s Insurance: When you let a property, particularly if this was your own home, it’s tempting to just leave the insurance on a property owner’s policy; no hassle, you’ve been with the company for years, so just leave things as they are, right? Well no, that’s completely wrong and muddled thinking. For as start, every […]

… LandlordZONE.

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