New potential 100% + Tax charge for Buy to Let Landlords could seriously damage YOUR wealth

Warning - 100% + potential tax charge could do massive damage to the property market and business confidence

 

It is now over six months since  the recent budget, and  I still can't believe the lack of clamour against two particular measures proposed by chancellor George Osborne.

The first one is the tax on dividends which to my mind is an attack on the very people who will be heavily called on to get this country out of its problems

No - not George and his government cronies stuck in their Ivory towers; I mean Entrepreneurs

Business owners , especially small business owners (SMEs) , are the ones who take the risks to be self employed , to borrow from the bank against security pledged against their own homes, who then create the employment which generates PAYE and VAT on the employees spending , and now the government are attacking those very people who vote dividends for themselves out of the profits they generate

This is not investment income in its purest sense, but is instead profits on which corporation tax has already been charged

This is in my mind a disgraceful attack on our brave entrepreneurs who reward themselves with dividends, if they make  a profit.

They are the people who probably will have voted for the conservatives in the hope that businesses will have less interference from government, who should get out of their way, as they create more jobs.

If every small business were to employ one new employee in the next year  this will generate more tax through PAYE and VAT than this cynical attack on dividends which are a justified reward for making a profit

Surely George, you should wake up and look after the hands that feed you !

 

However much more serious in my mind is the second measure which some say has apparently been encouraged by the Bank of England, who warn of a potential bubble in the "buy to let market".

 

I am told that the real reason is that George Osborne believes that house owners will vote conservative while tenants will not.

Oh great, really? 

So you shaft existing naturally conservative leaning supporters to get support from new prospective voters - come on please - do me a favour , that logic surely can't be right!

First, I dispute there is any bubble caused by Buy to Let landlords because it is not at all easy to get mortgages, as a result of the measures already introduced by the Bank of England .

The only bubble in housing has been in London and around London, and that has been mainly as a result of outside foreign investors. This has cooled dramatically with the Russian sanctions and the Chinese economic uncertainty

Secondly, if you want to prevent a bubble happening you don't go and penalise those who already have mortgages - no you create a charge to discourage new mortgages being taken out for buy to lets

These new "effectively retrospective" measures will potentially cripple and even bankrupt many investors, who have taken responsibility to invest and to provide for their future, rather than relying on the state , as well as to provide much needed accommodation that is so badly needed in the country.

Again I am really shocked by George Osborne's callous approach, because these investors are more than likely to have voted for the conservatives, and this measure will be a cruel kick in the teeth for them

One thing that he might not have considered , or perhaps did he feel it was a worthwhile risk? -  is that this move might well be the factor that could cause a housing price crash .

If this happens, because housing is one of the factors that give entrepreneurs a feeling of security and certainty, it could back fire badly in the business world causing reduced investment and employment, as well as reduced confidence by banks to lend.

If the housing market crashes, and business confidence falls - then any wealth you have is also potentially damaged, because property is that intrinsically linked to the British psyche.

Will the rich property funds who support the conservatives suffer? Will they hell!

A clumsy measure George which might backfire badly and needs to be urgently reconsidered.

By all means discourage interest only mortgages, but don't penalise those who have had the courage to borrow to buy property, and who will now not be able to afford the tax payable on their rental profits, which could be potentially more than 140%  

 

So what do they do now?   Sell up?

Of course, that is easier said than done, and if everyone affected had the same idea, property prices will drop in value and a lot more  people than landlords  might well "lose their shirts"

These are truly shocking decisions made by "Boy George" and his treasury cronies , most of whom have probably never had to borrow anything, as a result of their trust funds and family wealth.

I am trying to encourage buy to let investors and business people to speak up .

We need to stop being so damned complacent and apathetic!

In my opinion, we need to make those MPs in marginal constituencies aware of these potential problems, because the others won't care.

Let's do our utmost to persuade George to listen and reverse this cynical arrogance in attacking this country's wealth creators

Let's encourage the small people to speak louder and get the government to listen.

I am worried that there is currently no effective opposition, so it is important business people speak up before George causes a needless catastrophe in the property market, and bankrupts some of his previously " naturally conservative thinking" supporters.

You only have to look at the way the conservatives are dealing shockingly with doctors and nurses to see how short term and badly thought out decisions can create havoc in the National Health Service, and this could be the same with landlords.

And yet we are not hearing the massive complaints I would have anticipated - do business people not understand what is going on?

I hope I have in some small way made you more aware of the potential consequences, and I hope I have encouraged you to speak to your MP to make your views known to government

Please have a look at our OBC website (http://www.obcaccountants.com/blog-post/proposed-tax-changes-buy-let-inv...) for some example wording for a letter that I encourage you to write to your MPs

I have clients and friends who could potentially lose everything as a result of these policies, and surely that cannot be the intention or purpose of this legislation - we need to force a rethink before it is too late

By the way - sorry - yes I did vote conservative this last election - but will he listen to me or my new MP Caroline Ansell who won a tight marginal seat in Eastbourne, with votes from people like me!

Mike Ogilvie

 

 

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