Two thirds of individual landlords are only liable to pay the basic tax rate on Income Tax, according to data released by the Government.
The Residential Landlords Association (RLA) says that this figure challenges the myth that landlords have large incomes, and so can cope with tax rises.
The data, which was obtained in response to Parliamentary questions from DUP MP Jim Shannon, shows that of the just over 1.9 million individual landlords returning a self-assessment tax return, two thirds were in the basic tax rate bracket, 30% were in the higher rate band and 4% paid the additional rate.
Treasury Minister Mel Stride MP also confirmed that landlords are taxed more than homeowners, noting that they pay tax on their rental income, additional Stamp Duty and Capital Gains Tax (CGT), unlike homeowners, which kills off assertions made by the former chancellor, George Osborne, that tax rises on private landlords were created to level the playing field with homeowners.
However, in another answer, the Treasury re-asserts that it estimates just one in five landlords will be affected by its recent and ongoing reduction in mortgage interest tax relief, confirming that it has no idea how many properties – and therefore tenants – will be hit by the additional cost pressure.
Given that the need for more rental housing is more acute than ever, the RLA is calling on the Government to scrap its decision to tax a landlord’s turnover rather than profit, abandon the mortgage interest tax relief changes and to no longer apply the Stamp Duty surcharge on additional homes where a property is adding to the supply of homes available to rent.
Alan Ward, the Chairman of the RLA, says: “The previous chancellor increased taxes on the private rented sector based on what are now clearly false assumptions.
“It is especially worrying that ministers cannot tell how many properties, and therefore tenants, could potentially be adversely affected by their policies.”
He insists: “We need more homes to rent to meet growing demand. It is time that the tax system encourages rather than stopped housing growth cold dead.”