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TODAY'S OTHER NEWS

Double Trouble: buy to let investors pay twice the tax of Tesco

Income tax paid by buy to let landlords now exceeds £3.8 billion annually – that’s more than double Tesco’s entire annual tax bill. 

Research by the National Landlords Association shows that - assuming typical deductions are made for regular maintenance, finance costs, and miscellaneous legal and management expenses - landlords in England have a combined taxable income in excess of £19.1 billion.

Even if all these pay only the basic rate of Income Tax (and many will pay far more) this equates to an estimated annual contribution of £3.8 billion in Income Tax alone or £1,668 per landlord.

This is before additional liabilities such as Stamp Duty, Capital Gains Tax, VAT, and the Additional Property Levy are taken into account.

Meanwhile, the UK’s largest supermarket chain, Tesco PLC, paid £1.63 billion in tax in 2018.

“Far from being subsidised by the taxpayer, private landlords make a significant contribution to the public purse. Furthermore, changes to landlord taxation made in 2015 are forecast to increase HM Treasury’s receipts from landlords by almost £2 billion, pushing total estimated Income Tax contributions to £5.7 billion in years to come” according to NLA chief executive Richard Lambert.

“These dramatic increases in landlords’ tax liabilities in the UK have led many to conclude that it is no longer possible to achieve a reasonable return on investment, prompting them to sell their properties and close their businesses. This is in stark contrast to the relatively small sums paid by many major retailers and online giants” he continues.

“The NLA’s conservative estimate of landlords’ tax liability suggests that they pay more than twice as much in Income Tax alone than Tesco’s entire tax bill and a staggering 62 times Amazon’s Corporation Tax bill in the UK.”

  • icon

    It’s only going to get worse
    #landordbashingforgenerationrentvotes

  • phil dillon

    If I was HMRC getting 3.8b I would be assuming this is a precious income stream and look after it, but nope HMG have decided they want more , so they kill the golden goose, you could not make it up, the incompetence of politicians is a crime

  • Paul Singleton

    Incompetence only surpassed (just) by the brexit fiasco!

  • G romit

    What this article doesn't mention is the effective rate of taxation. You really can't compare what tax is paid by different organisations without regard to their profit.

    to Feb '16 to Feb '17 to Feb '18
    Turnover £53,933m £55,917m £57,491m
    EPS 5.6p 8p 11p
    Operating Profit £1,072m £1,017m £1,837m
    Total Operating Expense £52,861m £54,900m £55,654m
    Net Profit £138m -£40m £1,206m
    Net Profit Before Taxes £202m £145m £1,298m
    Net Profit After Taxes £256m £58m £992m

    ...implies Tesco profit for 2017/18 to be £306m so not sure where the NLA has got its figures from.

    Apologies for the formatting is looks OK when I'm entering/editing it.

  • icon

    If only the story stopped at Landlords having to pay more,... but All the Tax & other financial pressures through endless regulation have increased Landlords cost - which like any business, has to be passed onto the consumer.
    In other words, Tenants ( Most of whom are our best customers )
    Govt isn't only hurting Landlords but also their customers, oblivious to the detriment its causing renters.
    Not just oblivious, but trying to pass off the blame onto Landlords !

  • icon

    Good post.

  • Paul Barrett

    Income tax would be about £6 billion per year.
    The reason it ISN'T.........................the PRS suffers losses of about £9 billion per year.

    Such losses are offset against income causing a lower profit amount to be taxed.

    The majority of the losses are caused by rent defaulting tenants.
    The way to generate more tax is to change the eviction process in cases of rent default only so that rent defaulting tenants maybe evicted by the LL with police assistance without recourse to any court action.
    This to occur after two month's rent default.
    This means after 1 month and one day where rent is paid in advance monthly.
    Such a situation would enable a LL to quickly relet and of course generate taxable rent receipts
    Govt must realise that the current eviction process is costing the Treasury £billions in tax.
    The question needs to be asked.
    Should the taxpayer essentially support feckless tenants in their rent defaulting?
    Which currently the Govt is by the mere fact of the dysfunctional eviction process.
    Surely no Govt should be supporting a process which facilitates massive losses to LL and the Treasury!!!
    The eviction process only needs to be amended in rent defaulting cases.
    It is Govt which is causing the massive losses to the Treasury.
    LL would be highly delighted in having more tax to pay on rental income as it would mean substantial reduction in rent defaulting losses
    Wonder if Dopey Govt will be able to join the dots to see how more tax could be achieved from LL.
    Somehow I doubt it!

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