Thousands of private landlords could be unfairly pushed in to a higher tax bracket following the introduction of new taxation rules for buy-to-let property, based on what the Residential Landlords Association (RLA) claim with the benefit of hindsight are ‘clearly false assumptions’.
The RLA calculate that around two thirds of individual landlords are only liable for the basic rate of income tax, based on government data, which the trade association insists challenges the myth that landlords have large incomes and so can cope with tax hikes.
Government figures reveal that of the just over 1.9 million unincorporated individual landlords returning a self-assessment tax return, two thirds were in the basic rate bracket, 30% were in the higher rate band and 4% paid the additional rate.
The figures come after David Miles, a former member of the Bank of England’s Monetary Policy Committee, recently warned that tax rises targeting landlords could end up hurting tenants.
Separate research recently conducted by the NLA shows that the proportion of landlords with a single property who anticipate that they will be moved up a tax bracket as a result of the changes has almost doubled since the end of 2016.
Some 16% landlords with a single property now say the changes will push them into a higher income tax bracket – an increase of 7% compared with the final quarter of last year.
RLA Chairman, Alan Ward, commented: “The previous chancellor increased taxes on the private rented sector based on what are now clearly false assumptions.
“It is especially worrying that Ministers cannot tell how many properties, and therefore tenants, could potentially be adversely affected by their policies.
“We need more homes to rent to meet growing demand. It is time that the tax system encourages rather than stopped housing growth cold dead.”