One group of property investors is taking a stand against this tax raid by mounting a legal challenge to the Government’s proposals to increase tax on buy-to-let investments.
They hope that a judicial review will overturn the introduced legislation preventing individual landlords offsetting mortgage interest costs against rental profits before tax. These legislative changes will result in some investors paying tax even where they generate no profit.
The judicial review challenge will be based on an argument that the long established principle that expenses incurred wholly and exclusively for the purposes of the business are deductible when calculating the taxable profits has been ignored.
The changes introduced by Finance (No 2) Act 2015 have been criticised by a number of finance and legal professional bodies as being unreasonable, unworkable and not thought through.
It remains to be seen whether a judicial review will progress or ultimately be successful.
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