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Buy to let property investors in England pay a minimum of £3.8 billion in income tax on their rental property earnings every year.
Further to our article last week confirming that UK landlords contribute as much as £16.1 billion per year to the UK economy, it seems that their income tax bill is huge as well.
New research carried out by the National Landlords Association has shown that the combined taxable income for landlords in England on a yearly basis in 2018 was recorded at £19.1 billion – when costs paid for regular maintenance, finance costs, and miscellaneous legal and management expenses are taken into account.
If the tax is simply calculated at the basic rate of income tax – and many landlords will pay much higher rates – this would equate to an estimated minimum of £3.8 billion in income tax annually.
This has become particularly pertinent as changes to the way landlord income is taxed were phased in by the government over the last few years, changes that are likely to push many landlords into a higher income tax bracket.
The huge income tax liability figure also excludes additional mandatory fees such as stamp duty land tax, capital gains tax, VAT, and the additional property levy
NLA chief executive Richard Lambert commented: ‘Far from being subsidised by the taxpayer, private landlords make a significant contribution to the public purse. Furthermore, changes to landlord taxation made in 2015 are forecast to increase HM Treasury’s receipts from landlords by almost £2 billion – pushing total estimated Income Tax contributions to £5.7 billion in years to come.
‘These dramatic increases in landlords’ tax liabilities in the UK has led many to conclude that it is no longer possible to achieve a reasonable return on investment, prompting them to sell their properties and close their businesses.’