Following the introduction of new taxation rules for buy-to-let property, thousands of private landlords could be unfairly pushed in to a higher tax bracket.
The Residential Landlords Association (RLA) calculate that, based on government data, around two thirds of individual landlords are only liable for the basic rate of income tax, which challenges the myth that landlords enjoy large incomes and so can cope with tax hikes.
Of around 1.9 million unincorporated individual landlords who completed a self-assessment tax return, two thirds were in the basic tax rate bracket, 30% were in the higher rate band and 4% paid the additional rate.
The Treasury Minister Mel Stride confirmed that landlords are taxed more than homeowners, as, unlike homeowners, they pay tax on their rental income, extra stamp duty and capital gains tax.
Given that the need for rental properties 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;
- no longer apply the stamp duty levy on additional homes where a property is adding to the supply of housing available to rent;
- abandon the mortgage interest relief changes.
David Smith, RLA Policy Director, said: “The previous Chancellor increased taxes on the private rented sector based on what are now clearly false assumptions.
“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.”