I just can’t believe that you can’t subtract what it costs you as landlord (mortgage) from what you’re being paid by the tenants! Ok if you own the property outright then of course pay tax on the entire rental amount. But otherwise how can your cost not be taken into account in what you pay in taxes on the rental income?!? And if your mortgage isn’t significantly less than the rent you’ll end up paying more in tax than what you clear! It’s ludacris.
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It is. Name one other business that is taxed on turnover and not profit!
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It totally un-incentivises me to want to work more hrs in my NHS job. You can deduct the mortgage interest at 20% tax but if you go over 40% bracket you loose out. Working 3 days a week + rental income is about the sweetspot.
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so let’s think about this… someone has cash as a result of saving from earnings (earnings that have already been taxed). They invest it by buying a rental property outright and you want to then tax them but not you who has not spent time and discipline saving money to buy a property outright but has simply taken advantage of a mortgage to buy something on credit that you cannot afford to buy now. Why not also be taxed on your rental income? You had a choice to save (and earn interest on) your money or to take out an expensive loan. You chose the latter because you want a luxury asset (to the home you already live in) now rather than later, presumably to benefit not only from capital appreciation but also from someone else paying off your mortgage for you so that you end up entirely owning an asset someone else has paid for.
Talk about first world problems… 
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The international giants like google, Amazon, Facebook, et al should be taxed this way based on the turnover in each country they operate in
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So imagine a a firm makes 10% profit out of their turnover and is taxed at 25% of the turnover . How long before they go bust? Tax on the profit line is fair enough. The big thing is what can you claim as expenses and what is the tax rate?
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I think that was the plan. Neither party want smaller landlords who they cant control, but the Tories in particular want owner occupiers not tenants as theyre more likely to vote for them.
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That is a fact and doubt about it.
It is easier to work with fewer large companies than lots small individuals. Less staff at HMRC.
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That I very much doubt. Many changes to the rental market were made to get (some) landlords to improve rentals and make them safer. Plus of course getting them all to declare rental income and pay their taxes
Ive heard it directly from senior Tories.
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Yep, I read one post where someone calculated he was paying 82% tax because of S24 and I know someone else pay over 100% tax on income not earned. I truly do not understand why there isn’t a class action to get S24 overturned. If Non Doms changed Reeve’s mind so can Landlords. Firstly BTL’s are not second homes and also the tenants are not paying off a mortgage so the landlords end up with the asset, most landlords use interest only mortgages. David Ward who successfully challenged Warrington Council over a parking ticket Case Authority WI-05257F 30th of May 2013 has the right idea. The ultimate conclusion is much of what the Government is doing is not legal - in 2015 he makes a formal challenge to 12 presumptions of law. It is a brilliant read, and he is not wrong. He has a case study of a farmer getting a good from farm to shelf - you are paying 85% tax on this good.
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Lets stick to Tax on Rental Income not other taxes. Tax is charged on profits after expenses - not on Rent receivable gross. And Mortgage payments are capital repayment and interest. And interest is claimable by all tax payers at basic rate only. Only with very high income earners with large mortgage interest payment are limited gradually.
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Sell your rental and put your money in an S & P 500 index fund. You can put £20k a year in to it tax free and you don’t pay tax on your profit. It’s just increased 27% in 2024 and with trump back in power the economy will no doubt thrive in the next 4 years…
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If it’s so ludicrous then don’t buy a house to rent out. The rules are known, they shouldn’t be a shock to anyone.
The bottom line is that the buy-to-let industry is not one any Government wants to encourage. This is not an industry that adds any actual value to an economy. It is not adding new capacity, it is not creating a new service or improving efficiency.
Incidentally, the same rules apply if you are a business and buy your property via a loan/mortgage. only the interest is tax deductible. If you rent the property, then the full amount is tax deductible.
So why should landlords be treated differently from businesses?
But just like any business, only Interest on a loan is considered an allowable business expense. The fact that the only source of revenue for a landlord may have been financed through a loan, is not the fault of Government. It is the fault of a flawed business model.
If 100% relief is allowed on capital repayment of a mortgage for a residential property, then the same relief would have to be allowed for business property mortgages, in fact for all business loans too. Currently, only interest is deemed an allowable expense.
Why should landlords be treated differently from any other business?
Your wrong. Interest on a mortgage is not deductible as an allowed expense for a Landlord. That’s S24 for you.
A business financing their business, can deduct their interest… Landlords cannot if they are a higher rate tax-payer.
If Landlords are not offering a service, then why are rents going sky high, as more Landlords sell up. If Landlords in the PRS are not needed, then you believe that the council can afford to house all of those tenants? or that they could all rush out & buy one of the houses that Landlords are selling? There will always be people who want or need to be tenants, either because they don’t want to buy or cannot afford to.
Rules have changed. The business model is becoming flawed only because of the changes to rules in recent years, and because the business model is becoming more flawed, more Landlords are selling / less Landlords are investing, and that is causing great stress for tenants who are now unable to find property to rent, at an affordable price.
PRS has & does add capacity. When a builder builds houses, whether they sell them to owner occupiers or Landlords, it adds capacity. The more houses anyone buys, the more builders will build. To grow the Nation’s housing capacity, we need investment by all types of owners, whether that be Councils, Housing Associations, Owner Occupiers, Landlords in the PRS, or Rent2Rent. If we all work together to invest & build more houses, then capacity will increase.
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You said it @Bob8 …so why are we?
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You note I said" tax on the profit line is fair enough " I have never said landlords should be treated differently. I have no mortgages so not aware of any tax breaks in this respect .You do know the difference between turnover and profit. ?
Well that’s what happens when people voted Tory,!
will3. I own all my places outright so my expenses are petrol car tax , repairs insurance, materials paint ,certificates and so on . All this for me is tax deductible. So what is left is profit. After personal allowance I pay tax on the profit. That is fair enough. Mortgages are a different kettle of fish, so those landlords who took out buy to let mortgages ,which have now increased have mortgaged too much and not allowed for a “sticky” situation. This is a hard lesson . Best sell up and get out. The tax man views all this as an investment on our behalf so is tightening tax allowances