By Andy Noton
Recently released figures by HMRC show that landlords took advantage of a record £14bn in tax breaks during 2013. The full extent of the tax advantages that landlords benefitted from was revealed following a Freedom of Information request by The Guardian.
Property owners who rent out homes can claim tax relief for a wide range of expenses, including legal fees, gardening and cleaning costs, insurance and utility bills, as well as relief against the cost of mortgage interest. In fact, some £6.3bn was claimed in 2013 for mortgage interest tax relief alone.
With landlords able to enjoy such extensive tax breaks, it's hardly surprising that the number of people renting out property has increased by more than a third since 2007/08. According to a recent report in The Guardian, there are now more than 2.1 million landlords claiming reliefs in the UK.
However, while the National Association of Landlords welcomes the ongoing tax privileges enjoyed by landlords, arguing that renting out property is a business and therefore should be treated as such for tax purposes, anti-homelessness charities are urging the government to review the issue as a matter of urgency.
Shelter has highlighted the chronic housing shortage in the country along with the huge cost of housing generally, and has questioned tax reliefs which it claims unfairly benefit landlords.
At present, there is no indication that the tax benefits enjoyed by landlords are going to be reviewed any time soon. However, we will be watching the situation closely and will write further updates if any changes to the current system are announced.
Our property group acts for a large number of clients with property portfolios. If you have any specific property tax questions or would like assistance with any property accountancy matter, please email me.