This article has been submitted by RLA
Two thirds of individual landlords are only liable for the basic rate of income tax according to data released by the government.
The Residential Landlords Association (RLA) says that it challenges the myth that landlords are wallowing in vast sums of money and so can cope with tax rises.
According to the figures obtained in response to parliamentary questions from DUP MP, Jim Shannon, of the just over 1.9 million unincorporated individual landlords returning a self-assessment tax return, two thirds were in the basic rate bracket, thirty per cent were in the higher rate band and four per cent paid the additional rate.
The Treasury Minister, Mel Stride MP, also confirmed that landlords are taxed more than homeowners, noting that they pay tax on their rental income, extra stamp duty and capital gains tax unlike home owners.
This kills off once and for all assertions made by the former Chancellor, George Osborne, that tax rises on private landlords were about ‘levelling the playing field’ with home owners.
Although, in another answer the Treasury re-asserts that it estimates only one in five landlords will be affected by the reduction in mortgage interest relief, it confirms that it has no idea how many properties, and therefore tenants, will be affected by this additional cost pressure.
The figures come after David Miles, a former member of the Bank of England’s Monetary Policy Committee, recently warned that tax rises on the private rented sector will serve only to “cost” tenants.
Given that the need for more homes to rent is more acute than ever, the RLA is calling for the government to scrap the decision to tax a landlord’s turnover, rather than profit, abandon the mortgage interest relief changes and to no longer apply the stamp duty levy on additional homes where a property is adding to the supply of housing available to rent.
RLA Policy Director, David Smith, said:
“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.”
In all 1,254,ooo landlords are paying the basic rate of tax, 584,000 the higher rate and 82,000 the additional rate.