“Unthought-through”, “unfair and unreasonable” and leading to “extreme confusion” - those are the thoughts of Britain’s leading professional accounting body on George Osborne’s proposed buy to let tax changes.
The Institute of Chartered Accountants in England & Wales, speaking to the Daily Telegraph, has slammed the Chancellor’s controversial new tax on buy-to-let tax as “unfair and unreasonable” saying it will force some landlords out of business, distort the private rental sector and make life harder for young potential buyers.
Osborne announced in July that from 2017 he would be clamping down on buy to let landlords by removing the right to claim more than the basic rate tax equivalent in relief for mortgage interest. He is also tightening the rules about claiming for wear and tear by allowing claims only for money spent rather than the annual 10 per cent of rental that’s currently allowed automatically.
The measure is included in the Finance Bill now going through Parliament. The ICAEW has told the Telegraph that Osborne’s professed bid - to create a more level playing field between property investors and owner-occupiers - will actually disproportionately hit small property investors, who include middle-class savers adding one or two buy to let properties to their pensions and other portfolios.
“Large companies investing in residential property will not be affected – and will be able to continue claiming tax relief. Wealthy investors buying cash are also excluded” says the Telegraph article featuring the institute.
“Far from being level, it leaves the playing field with a cliff edge in the middle” says the ICAEW.
“Taxpayers will have priced and borrowed according to the tax relief they expected, and these borrowing decisions would necessarily have a long timeline. Many will not be able to restructure their debt” it claims.