According to data released by the government, only two-thirds of the landlords come under the bracket of basic rate of income tax. The reaction from The Residential Landlords Association (RLA) is that this information explodes the myth that most of the landlords are rolling in money and can very well pay up their taxes.
In response to the questions put forth by DUP MP Jim Shannon in the Parliament, of the 1.9 million individual landlords who are in the disorganized sector and are not incorporated, two-thirds come under the basic tax bracket. These landlords have submitted tax returns that were self-assessed. Of the total of 1.9 million, 30% came in the higher tax bracket and only 4% paid the additional tax rate.
According to the treasury minister Mel Stride, he has confirmation that landlords end up paying more taxes than home owners. They shell out more money that goes towards taxes on rental incomes, and they also spend extra money on Stamp Duty as well as Capital Gains Tax. According to the spokesperson of the RLA the assurances given by former Chancellor George Osborne that increased tax rates levied on private landlords have created a level playing field with home owners does not sound true after all.
The Treasury has countered with a strong re-assertion that according to its estimates, only 20% of the 1.9 million odd landlords are likely to be affected by the recent reduction in the interest relief for mortgage. It is anybody’s guess on the number of properties and tenants living therein who are going to be affected by this cost pressure.
What with the urgent need for more houses on rent, the RLA is urging the government to altogether scrap the recent decision on taxing the landlord’s turnover instead of only the profit. They are also pressing for the abandonment of the mortgage interest relief changes and to also do away with the Stamp Duty levy that is being exercised on additional homes, which are certainly helping ease the pressure on the demand for more homes that can be made available on rent.
The RLA Policy Director, David Smith is of the view that the increase on taxes on the private rented sector initiated by the previous Chancellor was based purely on false assumptions and not on facts. With ministers having no clue about the number of properties or tenants that are being affected by their policies, they have no idea about the intensity of the problem. More homes need to be built to meet the growing demand, which the system should support and encourage.