Editor's note: This brief was summarised by The Property AI Team from a report by The Negotiator. Read the original article for full details.
Chancellor Defends 2% Income Tax Hike on Landlords' Rental Earnings
Chancellor John Healey has defended the Income Tax increase on property owners announced in his Budget, saying he was avoiding a tax rise for workers earning wage income and targeting those with assets. Landlords will pay a further 2% in Income Tax on their rental earnings from April.
Speaking on BBC Radio 4's Today programme, Healey said: "I am having to ask more from some, but I am protecting income that's earned through employment."
He added: "My priority has been to try and protect earned income through employment and dividend income which is often part of business investment."
What the Budget Changes Mean for Landlords
Under the Budget provisions, the basic rate of tax on rent will rise to 24%. Healey's predecessor, Rachel Reeves, had planned to increase the rate to 22% from 20%.
The higher rate will go up from 40% to 44%, and the additional rate from 45% to 49%. The Treasury said 84% of income tax payers would be unaffected by the changes.
Industry Reaction
Philip Boyden, MD at Essex and Suffolk agency Boydens, said: "The Budget disproportionately squeezes private landlords while offering narrow, restricted interventions for prospective homebuyers."
He said: "The introduction of another 2% tax increase on property income, confirms an ongoing pattern of targeting the private rental sector."
Boyden added: "The additional tax burdens, combined with the escalating regulatory environment with the introduction of the Renters' Rights Act, will inevitably push rental prices higher and force landlord exits."
Source: The Negotiator