The Say No to George petition that demands the Government to reverse its plans to cut mortgage interest tax relief for private landlords has received a response.
After attracting over 20,600 signatures, the Government has replied. If the petition gains 100,000 signatures, the Government must consider the matter for debate in Parliament.
The official response from the Treasury states: “The Government is committed to a fair tax system so is restricting tax relief landlords can claim on property finance costs to the basic rate of income tax.
“Landlords are currently able to offset their mortgage interest and other finance costs against their property income, reducing their tax liability. This relief is not available for ordinary homebuyers and not available to those investing in other assets, such as shares.
“Currently, the landlords with the largest incomes benefit the most, receiving relief at their marginal tax rates of 40% or 45%.
“By restricting finance cost relief available to the basic rate of income tax (20%), all finance costs incurred by individual landlords will be treated the same by the tax system.
“This recognises the benefits to the economy that investment in property can bring, but ensures the landlords with the largest incomes will no longer benefit from higher rates of tax relief.
“By unifying the treatment of finance costs for all individual landlords, the Government is reducing the distortion between property investment and investment in other assets, and reducing the advantage landlords may have in the property market over ordinary homebuyers.
“Less than one in five (18%) of individual landlords are expected to pay more tax as a result of this measure.
“Taking account of the other measures from the summer Budget, the Office of Budget Responsibility (OBR) has not adjusted their forecast for house prices. The OBR expects the impact on the housing market will be small.
“Furthermore, this change is being introduced gradually from April 2017 over four years. This will give landlords time to plan for and adjust to these changes.”1
The petition can be found here: https://petition.parliament.uk/petitions/104880/signatures/new