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Two landlords looking to fight the Government after it announced last summer it was cracking down on mortgage interest tax relief on buy-to-let properties have raised £50,000 in nine days.
Two landlords raise £50k in nine days via crowdfunding campaign to fight tax relief crackdown on buy-to-let
01-07-2016
•Two landlords looking to challenge government on BTL tax relief move
•Osborne landed bombshell in summer Budget
•Means the amount landlords can claim as relief is set at basic rate of tax
By Lee Boyce for Thisismoney.co.uk
Two landlords looking to fight the Government after it announced last summer it was cracking down on mortgage interest tax relief on buy-to-let properties have raised £50,000 in nine days.
Thousands of buy-to-let landlords will see earnings hit after Chancellor George Osborne announced in his Budget in July that the amount landlords can claim as relief will be set at the basic rate of tax – currently 20 per cent.
Some current basic-rate taxpayers will also be hit, because the change will push them into the higher-rate tax bracket.
Nasty surprise: In July, George Osborne delivered a nasty surprise for landlords in regards to mortgage tax relief.
This change will be phased in over a four-year period from April 2017.
Currently, landlords can claim tax relief on monthly interest repayments at the top level of tax they pay of 45 per cent.
Under the new system they will get a 20 per cent tax credit for mortgage interest.
Two private landlords – Chris Cooper and Steve Bolton - are now looking to battle the Government on the move, which came out of the blue last year.
Mr Bolton owns around 20 residential and commercial properties. He is also the founder and owner of Platinum Property Partners, a buy-to-let specialist with a portfolio worth a total of £200million.
Mr Cooper is a part-time landlord who is using buy-to-let as part of his pension.
The duo launched a campaign via crowdfunding website Crowd Justice on Boxing Day. They have received the backing of more than 700 donors in little more than a week.
They hope to secure a judicial review of specific clauses of the Finance Act 2015 in which the Government installed changes which prevent landlords from being able to offset mortgage interest costs against rental profits before tax is calculated.
The Government would have 21 days to respond to the application before a court decides whether it is granted.
If approved, a hearing would then be scheduled by the court, after which a ruling would be made.
Mortgage interest relief is estimated to cost £6.3billion a year, a Freedom for Information request revealed last year.
On the campaign website, it says: 'Without the necessary funding, we will not be able to make progress.
'Those involved with this campaign fully support the elimination of unethical, unprofessional and illegal practices and unscrupulous landlords in the private rented sector.
'We also welcome fair measures to cool the housing market, so that we avoid the historical "boom and bust" scenario. However, Clause 24 is not the fair or intelligent means of achieving that goal.'
Clause 24 is the part of the Finance Act which will see this change phased in.
A plethora of reports have indicated that reforms could add to the cost of rents as landlords look to recoup the tax perk.
A parliamentary petition to scrap the changes, launched last summer, has secured nearly 50,000 signatures.
It is unlikely it will reach the 100,000 signatures required by 27 January 2016 in order for it to be debated in parliament.
Clause 24 is the part of the Finance Act which will see this change phased in.
A parliamentary petition to scrap the changes, launched last summer, has secured nearly 50,000 signatures.