how does the budegt affect BTL?

Tan.

So by limiting interest paid to basic rate tax, basic rate tax payers will get punished for just trying to make a living and will get taxed the full whack 20% on the interest amount previously deductible from profits.

Whereas actual buy to let investors who are higher rate tax payers will get a relatively small hit to their income in that they will "only" have to pay 20% on that amount, not 40%.

How exactly George, is this helping those on lower incomes?

Innys1

Tan. wrote: »

So by limiting interest paid to basic rate tax, basic rate tax payers will get punished for just trying to make a living and will get taxed the full whack 20% on the interest amount previously deductible from profits.

Whereas actual buy to let investors who are higher rate tax payers will get a relatively small hit to their income in that they will "only" have to pay 20% on that amount, not 40%.

How exactly George, is this helping those on lower incomes?

BR tax payers are completely unaffected by this change, which is what I posted at the very start of this thread, if you had bothered to read that far.

Or are you just having an unjustified dig at Tories for the hell of it?

Winrick

Innys1 wrote: »

Still not convinced about this - the tax you have calculated above is before expenses are deducted, i.e. the £12,000, not the £4,500 net inome. Is that correct?

This is borne out by Ian's posting after yours where he reckons taxable income, in his example, is 90k, i.e. after other expenses have been paid.

Martinsurrey is correct.

IanClapham is wrong. This is because Osbourne isn't saying that interest is no longer tax deduct able completely he's saying it's tax deductible but the tax rate applies to the deduction is 20% rather than 40% or 45% if you are a higher rate tax payer.

Under the old/current system this reduced the effective mortgage rate paid by BTL landlords from x% to x(1-marginal tax rate)%. The nex system means it is now x(1-20%tax rate)%. Assuming the landlord had a mortgage rate of 3% before tax and was a 40% tax payer, it was really 1.8% after tax. Now it will be 2.4% instead

Winrick

Innys1 wrote: »

BR tax payers are completely unaffected by this change, which is what I posted at the very start of this thread, if you had bothered to read that far.

Or are you just having an unjustified dig at Tories for the hell of it?

Exactly. Tan fails to understand that the basic rate tax payer with a BTL is currently getting a 20% interest rate reduction

benjus

At least MSE has fixed the article now - the original version was a very sloppy piece of reporting. They haven't put in a corrected example though...

Innys1

There's more bad news - or good, depending on your point of view. The 10% wear and tear allowance is being discontinued:

http://www.moneysavingexpert.com/news/mortgages/2015/07/summer-budget-2015-buy-to-let-landlords-hit-by-reduced-tax-breaks?_ga=1.252529481.1504906992.1415399208

Looks like a fair few BTL landlords are going to have to think twice, especially accidental ones or those who climbed aboard the bandwagon recently.

Winrick

benjus wrote: »

At least MSE has fixed the article now - the original version was a very sloppy piece of reporting. They haven't put in a corrected example though...

yes. I tweeted the writer Sam McFaul to change it. It's embarrassing really how a chartered accountant can get it so wrong and not check with anyone before publishing!

Tan.

I did read it and got completely confused. Thanks for insulting me.

Innys1

Tan. wrote: »

I did read it and got completely confused. Thanks for insulting me.

Maybe if you didn't insult someone else, you wouldn't have been insulted in return?

Tan.

Who exactly did I insult? Since when is a general exasperated remark directed at a politician taken as a personal insult...