Private-rented property is a favoured whipping boy of this government as it becomes subject to no end of increased regulation and penal (and illogical) taxation. This new IEA paper exposes the tax regime that is in the process of being introduced.
When George Osborne, the former Chancellor of the Exchequer, announced in his Budget speech of July 2015 that he would “restrict tax relief for financing costs for ‘individual’ landlords”, commentators were taken by surprise. The proposal had formed part of the Green Party manifesto at the 2015 general election and had been widely criticised. The proposals announced in the Budget became Section 24 of the Finance Act.
In fact, the phrase “tax relief” was a misnomer. Landlords received no tax reliefs. Rather, the tax position of private-sector landlords involved allowing legitimate finance costs to be deducted from income when they calculated their rental profits. Under George Osborne’s proposals, finance costs would no longer be deducted from income. However, there was to be a tax “rebate” of up to 20 per cent of their finance costs.