Buy-to-let tax legal challenge fails

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A legal team representing landlords has lost its legal battle to force the government to cancel the planned tax increases on buy-to-let landlords, reported The Guardian in October 2016.

The lawyers argued that increasing landlords’ tax costs would result in increased rents, and would be equivalent to taxing tenants unfairly.

The legal team was led by Cherie Booth QC, wife of ex-Prime Minister Tony Blair. In March 2016, The Guardian also reported that Booth and her family own a minimum of 10 houses.

Timothy Brennan QC, who represented HM Revenue & Customs and the Treasury, said:

“There are cases which justify the courts looking at them in the public interest. This is not one of them.”

Booth said that she would continue to fight against the what she regards as an unfair tax. Although an appeal can be made against the decision, it is thought that this is not likely.

The changes affect tax relief on commercial mortgage interest payments, which the campaigners claim should be regarded as a business expense. The Axe the Tenant Tax group believes that landlords are being taxed on turnover, instead of profits as is the case for most businesses. The group will continue to lobby the government to abolish the tax changes.

Landlords have been hit by increases in stamp duty, as well as the planned tax relief reduction. Despite the difficulties, many landlords still regard buy-to-let property as a good investment, especially as low-interest commercial mortgages are available through insurance brokers to finance purchases.

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