Following the swinging tax changes introduced in the recent Chancellor’s budgets, landlords are looking to take their fight against the measures to the high court.
Cherie Blair QC has agreed to represent the group of crowd funded campaigning landlords who have now launched the second phase of their campaign. This will challenge the government’s move to remove their ability to claim mortgage interest from rental income as an expense item before income tax.
Private landlords Steve Bolton, founder of Platinum Property Partners, and Chris Cooper, a small-scale landlord with around 15 properties, set a target of £250,000 to fund the next stage of their their judicial review court case.
The aim is to have the Treasury withdraw the change on the principle that businesses have always been allowed to charge interest on loans as an expense against their taxable income. Cherie Blair’s barrister chambers, Omnia Strategy, will challenging the ruling on the grounds it is a breach of individual landlords’ human rights because they are being treated differently to other businesses.
HMRC would otherwise remove the tax relief starting in 2017 and phased in over 4 years, reducing the amount of interest claimable by 20% each year, reducing to a 20% maximum claim. But the real issue is that the claim would be against total income as a tax credit, not an expense against rental income. This has the effect of increasing a landlord’s income by their rental income amount and would shift many into a higher tax band.
Appealing for donations through the crowd funding platform, Crowd Justice, Mr Bolton and Mr Cooper managed to raise an initial £50,000 for an consultation with the legal firm and are now attempting to raise another tranche of funding to take the case to the next stage.
Concerned about the effect of the tax measure on the rental market, where landlords many sell and reduce the amount of housing stock for rent, Mr Bolton has said:
“The days where ‘nobody loves a landlord’ must come to an end,” We need to unite to show that we will not accept the victimisation of landlords and tenants by the out of touch political elite.
“The Tenant Tax is wrong on every level and if we allow a normal business expense to become a taxable expense for landlords, who will be next; corporate landlords, shopkeepers, small business owners or anyone who has used finance to help expand their business?”
As reported by mortgagesolutions the campaigners are holding an event at the ILEC Conference Centre in Earls Court – a Tenant Tax Summit – Landlords Fight Back, on 9 June.
The event is being supported by firms with interests in the private rental sector such as Spareroom.com, Shawbrook Bank and Property 118.
Landlords up the ante in battle with HMRC https://t.co/5cd0VnsL0D
— LandlordZONE (@LandlordZONE) April 27, 2016