Partner Article

Derby Agent Advises Landlords To 'Switch To Incorporation' In Light Of Summer Budget Statement

In light of the summer budget statement, Martin & Co Derby is advising landlords who are facing losses following the decision to cut tax relief on buy-to-let properties, to save money by transferring one or more properties into a company structure.

The 2015 budget saw George Osbourne slash the tax relief that private landlords currently receive on their mortgage interest payments, cutting it from 40% or 45% to 20% by April 2020.

By turning their rental activities into a business, otherwise known as ‘incorporating a business’, a landlord’s total tax rate is greatly reduced. A tactic that Martin & Co are suggesting its landlords adopt, after the PRS felt the full force of the Chancellor’s budget.

David McKnight, Managing director at Martin & Co Derby, said: “Someone told me that we had a housing crisis in the UK, and I am not sure that anyone told George Osbourne that before the budget last week. To penalise landlords by cutting the tax breaks to 20% is in my view a little short sighted.

“Yes it may assist some first-time buyers and allow them to compete in the open market, but surly Georgie boy should focus on the problem first-time buyers have in obtaining mortgages and saving for deposits.”

The reasoning behind the decision was that George Osbourne claimed that this would “level the playing field” and it was “unfair” that landlords enjoyed this tax perk but owner-occupiers did not.

David McKnight disagrees with the assumption that all landlords are rich and deserve the tax hit.

Mr McKnight added: The suggestion that if you are a landlord, you must be rich is unfounded and in my view the vast majority of landlords are good folk just earning a living just like the rest of us.

“Landlords who can afford to buy good housing and look after their tenants should have some form of incentive ,as the future in housing is without doubt a crisis and I wish someone would tell Mr Osbourne.”

For more information on avoiding the new tax pitfalls, please visit: http://www.martinco.com/lettings-agents/derby.

This was posted in Bdaily's Members' News section by Poppy-PR .