A crowd-funded legal challenge being brought by two private landlords with the financial backing of over 700 other buy-to-let landlords is set to create waves. However, will it be enough to sink the Government’s boldest attempt yet to tax the buy-to-let market into submission?
As things stand, Section 24 of the Finance (No.2) Act 2015, which received Royal Assent on 18 November 2015, will start to apply from the 2017-18 tax year and, in graduating stages up to 2020-21, will reduce a landlord’s ability to offset mortgage interest costs against rental profits before calculating the amount of tax payable to the Government.
Funds raised have allowed Steve Bolton and Christopher Cooper to engage heavy-hitter Cherie Booth QC (herself a buy-to-let landlord along with her family and husband, ex-Labour Prime Minister Tony Blair) to head up their intended Judicial Review of the Government’s plans.
The involvement of Cherie Booth QC is something of a publicity coup for Mr Bolton and Mr Cooper which, in itself, is generating significant waves of its own and maximising publicity (read there “Government embarrassment”!).
Should the Government’s plans not be sunk, thousands of buy-to-let property investors the width and breadth of the land will end up paying more in tax on their current and future property investments. Those potentially hardest hit will be those with the largest mortgages and who, in the worst case scenario, could even end up paying tax on a loss. There is little wonder, therefore, that the necessary funds to mount the legal challenge were raised in just a few days with so much at stake for so many people.
Will the Government’s tax boat be sunk by this legal challenge? Only time will tell.
However, before we all potentially sail off together into unchartered waters together, now may be the time to ask your solicitor to review your property investment structures to ensure that they are as watertight as possible to cope with whatever waves do come.
Watch this space for updates…..
For advice regarding how these tax changes may affect you or to ensure that your property investment structures are maximising their potential, please contact Karen Methold, Partner at Rooks Rider Solicitors, on Telephone: 020 7689 7112 or Email: KMethold@rooksrider.co.uk.
For further information regarding the legal challenge, please contact Matthew Ball, Partner at Rooks Rider Solicitors, on Telephone: 020 7689 7142 or Email: email@example.com.