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Showing results for tags 'section 24'.
TL;DR - If you want to be taxed like a business, don't set up a mad leveraged empire with millions of pounds of mortgages which pays its tax via the personal income tax self-assessment form. _____ The four or five of you who don't yet have me on ignore will be aware that I've had a thrilling conversation with another poster about GAAP already here and have also (here on the Scum thread) reported elements of a temperate and well-mannered exchange of views with "Home Provider" in the now closed comments section of a recent Guardian article. My take on things is pretty much consistent with the position mapped out by the ICAEW in their 7 September 2015 briefing on "Finance (No. 2) Bill 2015 Clause 24: Relief for finance costs related to residential property businesses", which is now usually referred to as section 24. Here's what are in my opinion are the key passages (with emphasis added): and Now, somewhat unsurprisingly, when these ideas are encountered in the wild they tend to lean in a rather different direction and all seem to rest on this quote from the wonderful "The compelling case against Section 24" from the Axe The Tenant Tax Coalition. As posted on the Scum thread, my new leveraged landlord pal directed my attention to an HMRC internal manual BIM31005 which says (emphasis added) and also says Long and short of it, I think the leveraged landlords are offering a 'have your cake and eat it' argument There's generally accepted accounting practice (GAAP) and there are principles of taxation, and they are not the same thing A portfolio landlord can make a reasonable case that a prinicple of taxation is being set aside when they are not allowed to deduct mortgage interest expenses when determing taxable profits The idea that GAAP is being contravened is laughable horsehit (so much so that the quote attributed to the PwC partner strikes me as odd, to say the least) Buy-to-let mortgages were marketed to consumers to allow them to invest some money in housing The tax code as it stood in 1996 (when the marketing of this novel mortgage product began) did not countenance people trying to operate unincorporated property businesses with balance sheets of tens or even hundreds of millions of pounds and be paying their tax via personal income tax using a self-assessment tax return Any business structured in this way was always liable to be affected by changes to the personal income tax framework, and the personal income tax framework is liable to continual revision. Even leveraged property business themselves have seen repeated change. As per the ICAEW briefing "prior to 1998/99 interest paid on residential property lets was relieved as a charge on income". The idea that people's holdings of residential property represented a business was somewhat formalised in the ITTOIA 2005, but what one chancellor brings to pass another can reverse. As the PRS has grown and owner-occupation rates amongst younger cohorts have fallen it was always likely that BTL would catch a bullet, and the straws in the wind were obvious to anyone paying a blind bit of attention, way back in 2014.
This story in the Daily Express is completely totally awesome, apologies if it has been flagged already somewhere on HP&TE but I think it really deserves its own thread, Landlord making tenants homeless blasts Osborne's 'immoral' property tax, from 27 April, (tip of the hat to @errmm on the twitters for flagging it). The entire article is outstanding, but resisting the temptation to just quote all off it, but this will do for a start: (Emphasis added) The poor chap! It just gets better from there, the pictures are priceless and the comments are also top drawer with some very aggrieved posting from the BTL brigade. Astonishing.