The Chancellor Philip Hammond is being urged to use this week’s Budget announcement to alter pending changes to mortgage interest tax relief.
The existing rules that permit landlords to offset all of their mortgage interest against tax will, from this April, be phased out over the next three years until 2020/21.
Once mortgage interest relief has been withdrawn altogether, the consequences of Section 24 will mean that landlords will only be able to claim back a basic tax rate deduction of 20% off their tax bill, which will eat into their rental returns.
The Residential Landlords Association (RLA) is among those against the pending changes to mortgage interest tax relief and ahead of this week’s statement, the trade body is challenging the government over suggestions that buy-to-let landlords are taxed more favourably than homeowners – a claim cited as a primary reason for introducing the controversial mortgage interest relief changes coming in next month.
RLA Chairman, Alan Ward, said: “We are now weeks away from a tax change that risks investment in new homes, and will cause considerable hardship for tenant.
“It is troubling that Ministers have not published any evidence to back up their assertions that landlords are taxed more heavily than home owners. This is no way to make policy.”
The RLA is writing to the Office for Budget Responsibility to provide clarification on the tax burden on landlords compared with homeowners.
“We call on the government to use the Budget this week to halt its planned tax changes which will do little to provide the new homes to rent they claim to want,” Ward added.