Lettings agency Belvoir has thrown its weight behind the campaign against the unfair taxes planned for private landlords.
The change, announced by Chancellor George Osborne last year, would see mortgage tax relief significantly reduced for buy-to-let investors, leaving smaller landlords unable to offset interest costs before calculating tax – effectively forcing some to pay tax despite making no profit whatsoever.
Wealthy landlords, though, who can make cash-only purchases without mortgages, as well as corporations, institutions and overseas landlords, will be unaffected by the change.
Cherie Blair’s legal firm, Omnia Strategy LLP, is spearheading the challenge, which was launched just after Christmas 2015 by Steve Bolton, of Platinum Property Partners, and fellow landlord Chris Cooper.
Omnia argues that the tax breaches the European Convention on Human Rights and calls for a judicial review of the relevant clause of the Finance Act 2015.
Now, Belvoir, which has 211 offices nationwide, has pledged financial support for the campaign.
“The campaign for a judicial review of Clause 24 of the Finance Act 2015 was launched by two hard working Buy to Let landlords who are trying to prevent what is believed to be discrimination by the Government against individuals who borrow money in their own names in order to fund their portfolios,” says Belvoir Managing Director Dorian Gonsalves (pictured).
“The campaign is something that Belvoir fully supports. Crowd funding via CrowdJustice quickly raised the initial £15,000 needed to employ an experienced legal team to look at the logistics of challenging this unfair tax.
“Over £50,000 has now been pledged by landlords, agents and other affected sectors of the market. This money will be used to fund phase two; a court proceeding where a judge reviews the lawfulness of a decision or action taken by a public body – in this case the Conservative Government. Belvoir has pledged money to help fund this fight against what amounts to an unlawful breach of human rights and/or European law.”
Belvoir’s franchise owners will also be writing to landlords and inviting them to pledge their support for this important legal challenge.
“We will explain that Clause 24 will disallow the perfectly legitimate finance costs (including mortgage interest), of individuals who operate BTL properties in their own name. Institutions, corporations, wealthy cash buyers and overseas landlords will, however, be excluded, thus giving this sector of the market an unfair advantage,” says Gonsalves.
“Every single business in the UK is allowed to offset their total costs against their income before tax. The Summer Budget changed this fundamental and important business principle for landlords. Furthermore it was done without consultation.”
Omnia has now issued a Pre-Action Protocol Letter to HMRC. The government must now respond to the letter by Wednesday 10th February.
Further information about the campaign can be found at www.crowdjustice.co.uk/case/clause24.Google+