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Cherie Blair set to fight B2L tax relief cut in court

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Cherie Blair is set to challenge the Government’s buy-to-let tax relief changes in court, arguing it breaches human rights.

A campaign started with by two landlords, Steve Bolton and Chris Cooper, has contacted legal firm Omnia Strategy, which is led by the wife of former Prime Minister Tony Blair, for legal opinion and has been told it has a “reasonable chance of success”. The campaign has so far raised over £50,000 via the website Crowd Justice.

Blair’s team has written to HMRC calling for a judicial review of the Government’s policy change, which will see buy-to-let tax relief gradually reduced to the basic rate of tax from April 2017.

The Government’s new policy will prevent landlords with mortgages from offsetting mortgage interest costs against rental profit before calculating tax, which goes against the “fundamental business principle where income less costs equals profit”, argues the legal team.

The legal challenge argues that the Government’s move breaches the European Convention of Human Rights and that it constitutes unlawful grant of state aid to corporate landlords.

Bolton says: “This tax grab is unfair, undemocratic and underhanded, and we believe it is unlawful on a number of points. In no other business are costs wholly incurred to fund the business liable for taxation.

“In addition there is no substantiation in the Government’s proposal that the changes will create a level playing field between homeowners and buy-to-let landlords. The change discriminates against the typically smaller landlord who may incur effective tax rates of over 100 per cent while making an economic loss, and gives an unfair commercial advantage to many other categories of landlord unaffected by the change. We are therefore delighted that our legal challenge has progressed to the next stage and look forward to receiving the Government’s response.”

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  • Paul Dare 1st February 2016 at 8:58 pm

    The present system of income tax relief for mortgage interest is symmetrical.
    A simple example: if a tenant pays rent to an unincorporated landlord then the tenant gets no tax relief on the rent paid and meanwhile, if the rent happens to be the same as the interest and other allowable expenses that the landlord incurs, then the landlord pays no tax on the rental income. Alternatively, if the same occupier owns the property and incurs the same mortgage interest and other expenditures then no tax relief is given to the occupier on these outgoings. Thus, in both cases, HMRC receives no tax.
    What is unfair is that landlords are often better off (‘richer’) than their tenants. This gives them added muscle in the housing market. However, one person being better off than another is a more general aspect of life that political parties do address when they set out their stalls at election time.

  • Tasos Papanastasiou 1st February 2016 at 2:00 pm

    I agree with Cherie Blair. Are all self employed businesses going to be taxed directly on their turnover in the future? This policy us unfair, unjust and needs to be stopped. Greedy Chancellor will regret what he is done. No business will be able to survive running at a loss.
    Whatever happened to the free market economy promoted by conservatives?