Landlord tax from the Labour Party government Chancellor has been slammed as “unjust” – as millions face a pension savings blow.
HMRC set to punish state pensioners who have £19,200 to their name
HMRC is set to chase landlords for tax in an “unjust” move. The new landlord tax from the Labour Party government Chancellor has been slammed as “unjust” – as millions face a pension savings blow.
Landlord groups say the move would hit retirees “hardest”. The National Residential Landlords Association (NRLA) warns the eight per cent charge would particularly affect the 42 per cent of property owners who invest in rentals specifically to supplement their pensions.
Dr Neil Cobbold is commercial director at Reapit UK & I said: “Again, according to the EPLS, 42 per cent of landlords say they let property to contribute to a pension. In other words, rental income is their long-term savings plan.
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“Today, NI applies to earned income only up to state pension age; it does not apply to pension income or most savings returns. Singling out rental profits for NI even after retirement is fiscally inconsistent and unfair.
“Landlords already pay Income Tax on profits and have weathered years of fiscal and regulatory changes: the restriction of mortgage interest relief, higher stamp duty on purchases, tougher standards, selective licensing.
“They also now face the Renters’ Rights Bill on the horizon, as well as the hefty cost of bringing rented homes up to a minimum EPC C by 2030 – revealed by Reapit’s analysis to be £24billion.
“When you tax an activity, you get less of it. If this proposal lands, some landlords will pass on part or all of the cost to tenants. Others will decide the return is no longer worth it and sell up. Either way, supply tightens and rents rise.”
The landlord association has disputed Treasury calculations suggesting property owners typically earn between £50,000 and £70,000 from rentals.
The actual average gross rental income stands at £19,200 per year, according to separate calculations.
Ben Beadle, the association’s Chief Executive, stated: “Further punitive tax hikes on the rental sector will lead only to rents going up, hitting the very households the Government wants to protect.”
Former Institute for Fiscal Studies director Paul Johnson has warned: “The more harshly that landlords are taxed, the higher rents will be. One of the reasons that private rents have risen so much is that Government policy has substantially increased tax payable by private landlords.”