Buy-to-let property investors would lose a £1.9bn tax break under a proposal by the Institute of Directors to shake up the tax regime on savings. Financial Times
The IoD proposes to remove the ability of buy-to-let investors to deduct interest costs from rental income for tax purposes to level the playing field between investors in property and investors in financial assets..
‘The imbalance between investments in financial assets and in property is, primarily, a feature of a period of exceptionally low interest rates, but it is also caused by the tax regime which applies to traditional buy-to-let investment financed largely by borrowings,’ it said.
Buy-to-let investors often balance their rental income with the interest on the borrowings, so they pay no tax on income. The effect of not suffering tax until the property is sold ‘can be spectacular, particularly for higherrate taxpayers’, the IoD said.