Leader: Relief on buy-to-let reforms?

George Osborne’s unexpected reform of buy-to-let tax relief in the Budget is still producing headlines nearly two months after it was announced.

One national newspaper has even proclaimed the “death” of the buy-to-let sector. We believe this is going a bit too far but, nonetheless, there will be consequences.

Presently, landlords are able to offset their mortgage interest and other finance costs against their property income and those with the largest incomes benefit the most, receiving relief at their marginal tax rates of 40 or 45 per cent.

However, from April 2020 this will be restricted to 20 per cent, with the proposal being implemented gradually from 2017.

Experts suggest many landlords will switch their portfolios into a limited company, although clearly there will be costs attached to that.

Some landlords may even sell off their portfolios but one should remember that some people amass portfolios for capital appreciation only and, as long as they do not lose money because of higher taxation, they will hold on to their properties.

The market is yet to appreciate the full impact of the changes and this is because of a lack of clarity from the Government. There are many unanswered questions and these need to be cleared up as soon as possible so that landlords can start preparing accordingly.

Of course, this is based on the assumption that the changes will come in as currently proposed. A petition with 20,000 signatures has called for the reversal of the reforms. It needs just under 80,000 more for the issue to be considered for debate in parliament. Watch this space.


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Personal Touch to hike fees from October

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Bank of Scotland gets most FOS complaints

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Pension freedoms: stop the scams

At the beginning of 2015, we highlighted that the new pension freedoms that come fully online on 6 April also represent a very attractive opportunity for the criminal fraternity to scam savers out of some, or all, of their accumulated retirement savings.


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