Landlords Challenge Government Over Tax Changes

In a bid to stop the unpopular government plans to raise taxes on buy-to-let investments, two landlords have raised £50,000 in just nine days, securing the support from over 700 donors.

The money is required to mount a legal challenge to Clause 24 of the Finance Act 2015, which will prevent landlords from being able to offset mortgage interest costs against rental profits before tax is calculated. The campaigners have dubbed it the “Alice in Wonderland Tax Grab.”

They argue that not only are the changes unlawful, but that it could have a potentially devastating impact on the private rented sector and the economy as a whole.

All businesses in the UK are allowed to offset their total costs against their income, being taxed only on their profits. The changes outlined in the Summer Budget break this principle, discriminating against individual buy-to-let landlords. As a result, buy-to-let would become less profitable. One recent survey suggests that there could be a mass exodus of landlords from the market, with one in ten planning to leave if the changes go ahead.

Although the government has pushed back the changes to April 2017, with plans to phase them in over three years to minimise impact, that does not alter the fact that the changes are unfair.

Now with lawyer fees taken care of, an application for judicial review will be filed with the court this year, to which the government will then have 21 days to file a defence.

Back to news