Hammond unlikely to undo Osborne’s tax assault on private landlords
Chancellor Philip Hammond looks extremely unlikely to reverse his predecessor’s ‘Section 24’ tax assault on private landlords in tomorrow’s Autumn Statement.
A letter from the Treasury, in response to a report by landlord Dr Rosalind Beck on the impending tax change, says: “The Government stands by the reasons why the change is being implemented.”
From next April, the ability of private landlords to set mortgage interest costs against tax will be progressively phased out, with landlords from 2021 being given a tax credit equivalent to basic rate tax.
Beck, like other landlords, believes this will be immensely damaging to the private rented sector as a whole.
However, the Treasury – which took almost three weeks to respond to Beck – said: “The Government wants to ensure that landlords with the largest incomes no longer receive tax relief on their finance costs at a higher rate than those with lower incomes.
“Additionally, income tax relief for finance costs is not available to ordinary home buyers and not available to those investing in other assets such as shares. By restricting the relief to the basic rate tax, the Government is aiming to reduce these distortions.
“We estimate that only one in five landlords will pay more tax as a result of this measure.”
The Treasury letter said that phasing in the change gave landlords time to prepare.
Beck said the Treasury reply was dismaying and insulted the intelligence of landlords.
She said that Section 24 will not affect landlords with the largest incomes, but will hit those who owe the most in finance costs.
She said that phasing in a “bizarre and unjust” tax regime will not allow people to adjust.
She went on: “We are not stupid. We know that this is a euphemism for increasing rents, evicting, selling up and/or going bankrupt. Strangling a person slowly to death is not that much more preferable to delivering a swift blow to their head.”
Yesterday, radio’s You and Yours programme debated whether private landlords have been victimised by the Government.