Regarding the article posted by Leading industry figure Maxine Fothergill, a prominent person in the sector, is urging other letting agents to join a parliamentary petition urging the repeal of the Section 24 reforms to the taxation of buy-to-let landlords.
The petition, which was started by Midlands landlord Simon Foster, requests that the government restore the ability for landlords to deduct the cost of their mortgage interest from their taxes, something they had until former Chancellor George Osborne ended the programme in 2015.
Section 24 is an amendment in the UK’s tax law that applies to income on residential rental properties. The legislation means that landlords cannot claim as much tax relief as they could previously.
Before Section 24 was introduced, you could deduct mortgage interest from your income tax bill. You could also deduct other costs related to rental properties, such as mortgage admin fees or loans to pay for furniture.
Now, you’ll need to pay tax on all the rental income you receive. You can then claim back mortgage interest costs but only up to 20% (the basic rate of income tax).
In effect, it means landlords now pay more tax upfront. Plus, if you also receive a salary from another job, this could bump you into the next tax band which can increase the amount of tax you pay overall.
Fothergill says:” landlords and agents are painfully aware of the impact Section 24 has had on the buy-to-let market, which in many cases has resulted in a shortage of inventory as many landlords have been selling up as it has been less profitable to remain in the industry.”
Given the severe housing scarcity, we can’t afford to lose any more rental housing stock. To stop this daily loss, we need the government to pay attention and pay attention to our industry. Sign the petition here.
Reinstate tax relief allowing mortgage interest to be set against rental income – Petitions
