A leading accountant has seen a “surge in enquiries” from landlords affected by the Government’s decision to restrict tax relief on buy-to-let properties.
The Chancellor announced in his July Budget that the current 40 per cent tax relief for buy-to-let landlords will be phased out from April 2017. By 2020/21, tax relief will be restricted to the basic rate of 20 per cent.
Phil Bates, Principal at Cheshire-based Phillip Bates & Co, said the changes will cause “major upheaval” for landlords.
Phil, who has more than 100 landlords as clients, said: “The Chancellor’s announcement is likely to make a buy-to-let investment a much less attractive proposition.
“There is a very real danger that we will see a shortage of rental properties or increases in the rents landlords need to charge.
“We have seen a surge in calls from clients since the Chancellor’s announcement in the Budget.
Because the restrictions in tax relief are being phased in between 2017/18 and 2020/21, there is time for landlords to do their long-term planning in conjunction with their advisers.”
The phasing out of the tax relief is expected to raise around £890million for the Treasury by 2020/21.
Earlier this year, Phil Bates issued a warning to landlords to get their tax affairs in order to avoid being caught in a crackdown by tax inspectors.
HM Revenue & Customs has been stepping up its campaign to bring to book any landlords who they believe are avoiding paying tax due on rental properties.
Fewer than 500,000 taxpayers are registered with HMRC as owning second properties, but officials believe the true number of landlords is far higher at around 1.5million.