Umm, what?

Bennett, I would hope, knows that this is nonsense: that you’re discredited if you believe lizards are taking over the world, but you’re not discredited if you fail to recall how much is spent giving mortgage tax breaks to buy-to-let landlords.

What mortgage tax breaks to buy to let landlords? There aren’t any actually.

Being able to offset interest paid against rent just isn’t a tax break. Any and every business gets to deduct interest before profit is calculated. Because interest is a cost and costs are deducted before profits are calculated.

And this is stupid too:

In the final spending period of the Labour government, £96bn was allocated to housing benefit, £5bn to building new homes. It is a naked redistribution of taxpayers’ money to the 2% of people who are landlords.

Umm, some of that housing benefit does go to people living in council and housing association stuff you know?

78 thoughts on “Umm, what?”

  1. Also (1) landlords pay taxes on any profit.and (2) most of the benefit of benefit – covering the cost of their accommodation – goes to the presumptive poor. I’d say the naked redisitribution here is from those of us who pay our own rent to those who get it paid by the state.

  2. Another in a long line of Guardian trolls notable for their profound ignorance of any topic. I heard the interview and to describe it as a car crash is, if anything, understating the case.

    Particularly memorable from this particular Williams missive:

    ‘But she needs to be able to frame the conversation around her own assumptions’

    Good luck if you are a UKIP candidate trying to arrange your vision in an interview around the following assumptions:

    1/ That unlimited immigration might be undesirable and needs to be brought under control
    2/ That the EU is one of the most malign confidence tricks ever played on a group of people numbering in the tens of millions
    3/ That opposition to homosexual marriage on religious grounds is a justifiable point of view based on millennia of religious tradition

    See how far you get in a conversation with a Channel 4 interviewer making those points….

    ‘It is the new mantra of the right, covering everything from an honest mistake to a statement they disagree with. They love it because it accrues authority to them (they bestow and withdraw “credit”) and because of its finality’

    Evidently someone well acquainted with the work of Owen Jones, Lindy West or Richard Murphy (to name but three) whose work is peppered with use of the word ‘troll’ to indicate someone who disagrees with them and who consistently call well considered criticism and constructive comments at best ‘neoliberal’ and at worst ‘homophobic’ , ‘racist’ or ‘sexist’ as a way of shutting down any argument.

    Faced with this bizarre logic, I’d think her failure to understand the tax breaks accruing to Private landlords is probably the least of her problems….

  3. Surely the ‘problem’ is not that landlords get to deduct rent, but that homebuyers can’t deduct interest on their primary residence.

  4. Isn’t feeling entitled to.call other people -benefit claimants, anybody – presumptive a bit, well, presumptive?

  5. Mortgage relief on primary residences? It seems benefit claimants aren’t the only or even the biggest scroungers!

  6. Primary residences are not businesses.

    Subsidy for the middle classes- the worst kind of scrounging off the state.

    And the economic effect: higher house prices. Exactly why Tim Worstall has described this crap as face-palm.

  7. Nathalie also says:

    “100k each rather than 60, assuming that the land was bought by compulsory purchase order).”

    not that that should lower the cost of the land.

  8. Indeed MIRAS was exactly what magnusw is calling for and in some countries it is accepted. I remember my ex’s father, who lived in the US, extending his mortgage so he could buy a car, effectively getting tax relief on the interest part of the purchase of a car.

    It’d save me a couple hundred quid if it existed in the UK and I’d spend it in the shops.

    I’m happy, shop keeper is happy, his profits go up and HMG gets some extra tax from him. Shop keeper has some extra profit and spends it on having his shop front painted. Painter is happy and so on.

    In fact everyone is happy.

    Everyone.

    Except Ironman.

    Boo! to Ironman. Because of him, the shop keeper’s children are crying themselves to sleep with hunger and the painter gives up on life and throws himself off a cliff.

    Are you happy now, Ironman?

    Nah, I’m just kidding.

  9. @The Thought Gang.

    Business rates are paid on business premises. Residential properties are not business premises. Council tax is paid on residential premises. Either the tenant or landlord will be paying council tax.

    Your problem with this is?

  10. From the Murphmonster’s blog.

    “I admit to having a bug. And all I want to do is go back to sleep.”

    COME ON BUG!

  11. AndyC

    Americans used to get it on their cabin in the woods, too. I don’t know if that was ever available in the UK.

    Ironman

    Subsidy for the middle classes- the worst kind of scrounging off the state.

    Yes, it’s importand to keep a clear line between those redistributed from and those redistributed to. Otherwise, come the revolution, it’ll be dificult to work out who goes up against the wall.

  12. @ironman

    Surely the idea is that higher prices are offset by the reduced interest. In that sense there is a certain amount of rearranging the deck chairs, but it does at least create a more level playing field between homebuyers and landlords. Then (eg) income tax could be increased to offset the lost revenue, so homebuyers and landlords are both taxed on their income rather than their expenses.

  13. It depends what you’re comparing buy to let to.

    Yes, businesses can deduct interest paid on loans, but investors can’t (individuals anyway). Property rental is, for tax purposes, somewhere in between business and investment (some business reliefs are not available, loss reliefs are more restricted, etc.) so it is not automatic that expense deductions such as interest are allowed.

    Not that I’ve a problem with it, mind.

  14. If BTL owners were disallowed from deducting interest as a cost, then they’d be making enormous paper profits and staring down the barrel of a huge tax bill. In fact I’m pretty sure they’d have to jack up the rents just to stay afloat in most cases – what are typical margins in BTL, and what % of costs is interest?

  15. And interest relief for owner occupiers would be fine, so long as their notional rental income is taxed. The tax treatment of income and expenditure should match.

  16. magnusw

    “but it does at least create a more level playing field between homebuyers and landlords.”

    CGT – landlords pay it on gains, homeowners (principal private residence) don’t. That more than compensates for any interest (and other repair) costs that the homeowner can’t get tax relief on.

  17. Hallowed Be,

    Actually, that wasn’t Nathalie, that was “Green Cities”. And you can better your bottom Euro that they are fairly sure that land seized by the Courageous State from the grasping hands of the neoliberal capitalist exploiting 1%ers would be much cheaper than land bought at market prices.

    Not quite the cost of one round of 9mm but close.

  18. I do like this new ideas that allowing businesses to deduct expenses before taxing their profits is some sort of tax break. Seems we should tax everyone on “profits before costs” – guess that’s the idea of the turnover tax proponents. Wonder what they think it’d do to low margin high volume retailing for instance – I mean, it’ll catch out that nasty Amazon, which I imagine is target number one, but what do they think it’ll do to the price of their supermarket shop?

    Incidentally, Tim, what’s your current “competence” rating for her? Has it had a downgrade?

  19. Oh, and by the way, what the ff is a “food neutral home”? Or, come to that, an “energy neutral” one.

    Even neolithic man’s caves weren’t “food neutral”. You had to go out in to the wilderness to hunt and gather.

    How much land are you going to need to grow the necessary food for one family without any of the benefits of scale that modern agriculture provides? Even if we are all reduced, by law, to vegan locovores?

    Bunch of nutters, really. Which gets me inexorably back to my 9mm fixation.

  20. Not only is a lot of housing benefit paid to housing associations, but they use that to build more housing. So a large part of that housing benefit bill is actually a subsidy for building social housing.

    Most housing association building is debt funded, based on future rents which are only achievable because of housing benefit.

    Even better, because it’s a rent subsidy, it’s channelled towards places where people actually want to live rather than where the planners think they should.

    Not that this means housing benefit is a good idea, but to claim that it is a subsidy for greedy private landlords and doesn’t help create new housing is a nonsense.

  21. SE, the Distributists wanted 3 acres and a cow. Don’t know if that would feed a family, but it’s a very inefficient way of feeding people (and these days the animal rights people would object to the cow).

  22. SE – a food neutral and energy neutral home is one where the steam from your shit keeps you warm and also feeds your organic vegetable garden.

  23. @ Andy C

    “Business rates are paid on business premises. Residential properties are not business premises. Council tax is paid on residential premises. Either the tenant or landlord will be paying council tax.

    Your problem with this is?”

    Business rates are higher than council tax. I don’t know how much higher they typically are, but the last business rates bill I was responsible for was approximately 50% of the rental value of the property. Council tax is more like, what, 10-15%?

    Both are paid by the landlord,as any fule no.

    So my ‘problem’ is that BTL landlords, who clearly use their property for business (we know this, as they claim it’s a business when they’re deducting their expenses and not paying national insurance) then why do they get to pay the (significantly) lower tax?

    If I will pay £5k of tax when letting out my building as a shop, but only £1k when letting it out as a home, then how is that anything other than a tax break?

    Or shall we put your ‘they pay one or t’other tax, so what’s the difference’ vibe to the test by offering BTL landlords the option to choose? How many do you think will take up the business rates option?

  24. you are right about the tax breaks, but that is what she would do, and most likely what Ballsup will do if he gets half a chance

  25. As things stand, we’re all in receipt of tax breaks for their very generous 0% allowance on oxygen.

    But it’s becoming abundantly clear to me that we cannot breathe without the assistance of the government, so I will fully support them if they introduce an air tax at a rate of say 5% on the first £10,000 of income. (Obviously there would be exemptions for single mothers and others who really need air, as opposed to those of us for whom it’s a luxury.)

  26. bloke (not) in spain

    Fascinating conversation going on here. I’m wondering if the views are splitting the ones who are doing BtL & the ones who aren’t.
    Let’s be honest. The entire property thing’s a “fix” to encourage steadily rising house prices.
    The artificial control on the supply side.
    The artificial low interest rates, stealing from savers.
    The strange notion, property is a “safer” investment than “risky” investment in productive endeavours. We’ll see how that works out when property prices tumble & banks find out lending a great deal of credit where the underlying asset is all of the same nature ain’t the safest thing to do. But hey-ho. There’s deposit guarantee & “the banks are too big to fail” & it can all be socialised away to the taxpayer. Like last time.
    And we can carry on with a continuing net transfer of wealth from the productive young to the feckless baby-boomers* for a bit longer. Whilst they’re still willing to play the game.

    *Tha’s me folks!

  27. @The thought Gang.

    Business rates are generally higher than council tax because business premises are presumed to be generating a profit for the occupier.

    In residential lets, where it’s multiple occupancy then yes the landlord will usually pay council tax. In single occupancy the usual positon is that the ‘occupier’ is liable for council tax.

    Google “who is liable for council tax landlord or tenant”.

    so your ‘fule’ doesn’t know.

    I’m also amazed at your generosity if you’re the landlord of a business premises and are paying business rates on behalf of your tenant. You’re the first I have come across.

    Council tax and business rates are both intended to be charges on the occupier, not the owner.

  28. bloke (not) in spain

    “I’m also amazed at your generosity if you’re the landlord of a business premises and are paying business rates on behalf of your tenant. You’re the first I have come across.”
    Oh for heavens sake!
    The tax will be incident on the transaction, not one party to it. Absent the tax, the rent would be higher. So the landlord loses.

  29. At the moment people on less than the minimum wage are paying Income Tax and of course VAT on their purchases. So only fair that they should subsidise the mortgages of affluent people isn’t it. While we’re at it, don’t you think We should subsidise rail fares as well? Y’no, because London commuters should get back some of what they’ve paid; something no – one outside London can genuinely claim.

  30. @ AndyC

    Er. Yeah. Look up ‘incidence’. It’s not about who writes the cheque, it’s about who bears the cost.

    Property is rented out at the market maximising rate, therefore any taxes thereon are suffered by the landlord who has to lower his rent by the amount of the tax, because he’s already (legitimately) getting the tenant to part with the most number of pounds he’s able. Fule.

    Try it. Double council tax and see whether rents fall or whether tenants stump up the extra out of all that spare cash they don’t have. The landlord accepts the lower rent because option 2 is ‘no rent at all’.. because if the tenant had enough to pay another grand a year for their property, then the landlord would already be charging it.

    Still, I’m surprised to hear that business rates are higher because of profits. I though corporation tax was around for that sort of thing. Do businesses who don’t make a profit get a refund? Someone should tell them.

  31. Interested

    That doesn’t make any sense. Shouldn’t we be taxing the oxygen (rather than income)?

    The solution of course would be the compulsory “smart mask”.

    Companies (like electricity companies currently) could bid to supply the masks. They could then come up with their own (competitive) charging tariffs; these might include those such as lighter use “Pay as you go” tariffs (pensioners?) versus the more expensive “all you can breathe” heavy duty packages that might be better suited say to athletes or those that make lots of anonymous phone calls.

    Mt Murphy of course would be thrilled as, because the masks are connected to the Internet, evasion of the tax is generally minimal, with the punishments for evasion instantly effective…

  32. Surr Evil:
    Even rhetorically I wince at the idea of involuntary nine mil trepanning. Tell us your plans, let us question them. Then let’s decide and vote on it. Losers accept it and everyone gets on with life. Nathalie Bennett muffed up. Her idea could have been perfectly reasonable but she couldn’t bring forth a fact to answer a question. A few squirts of adrenaline and it was over as a serious interview.
    Had she recalled the cost when asked (100k X 500k =£50bn as Zoe/Green Cities would have it) I suspect Nick Ferrari had plenty of questions lined up about that too.

  33. @”Ironman
    February 25, 2015 at 11:23 am

    At the moment people on less than the minimum wage are paying Income Tax and of course VAT on their purchases. So only fair that they should subsidise the mortgages of affluent people isn’t it. While we’re at it, don’t you think We should subsidise rail fares as well? Y’no, because London commuters should get back some of what they’ve paid; something no – one outside London can genuinely claim.

    Surely that is only true if they pay more in taxes than they get in healthcare, police, benefits etc. I wouldn’t have thought that was true for many minimum wage earners but I would love to see your calcuations.

  34. Hmmmm.

    Assuming – thought experiment – that the lettuce-heads get in, is it legal under EU Law, international standards etc, for one particular set of businesses to have interest excluded from their business costs?

  35. David

    No calculations because.I.never suggested that all those on minimum wage were net contributors to the whole, any more than people on median wage are. But subsidised rail fares, they certainly would be net contributors to that. And subsidised mortgages, yep certainly would be.
    Look tax is used to pay for things that need to be paid for and cannot be charged directly to the user’s. So military spending, health, welfare. And tax must be about the wealthy subsidising the poor. So middle class government subsidies? FFS!

    Now, there will be somebody – because there always is – who claims that government does nothing for me so… fantasyland bollocks.

  36. Bnis

    “The strange notion, property is a “safer” investment than “risky” investment in productive endeavours. We’ll see how that works out when property prices tumble.”

    Unfortunately it would be political suicude for any government to allow that to happen, so they will prevent it using any means possible. That’s why it really is a ‘safer’ investment. So many people are on the gravy train that the driver would get lynched if it didn’t keep on going faster and faster (to use a shit analogy).

  37. Numbers.

    The Greenies say they want 19bn over 5 years to build 500k houses.

    There are 4 million rented properties, only half of which have mortgages attached – none of mine do.

    The value of interest offset against rent is about 2 bn a year.

    So if the teeny greenies take it away, assuming it can be done legally, then that’s about 100 per month average rent increase for half of renters. Outside of London and SE, that is anything between 10% and 20% ish on the rent, and it will fall straight through.

    BTL profit margins are not that generous for normal rentals, and a lot would just leave the market if the greenies also capped rents.

    Which means that most of the new houses would be needed for people forced out of the PRS by greeny policies !

    But they’d be lucky to get anything built before about year 3,because that’s how long it takes due to the Planning System.

    Poor old greenwag
    Sitting on a beanbag
    Eating mouldy cheese.

  38. @Ironman
    If someone pays £x and gets £x+1 back they are not subsidising anything. People only subsidise others if they pay more than they get.
    @”Look tax is used to pay for things that need to be paid for and cannot be charged directly to the user’s. So military spending, health, welfare. And tax must be about the wealthy subsidising the poor”
    Why is health in that list? Presumably because it is better for tax to pay for it that the user.

    BTW I don’t think tax relief on a mortage is a good idea.

  39. AndyC

    Business rates are generally higher than council tax because business premises are presumed to be generating a profit for the occupier.

    ===========

    Business rates are higher because they are accepted by the people.

    Governments tax whatever they can, as much as they can. The rate would be 100% on everything, if the people allowed it.

  40. bloke (not) in spain

    “Unfortunately it would be political suicude for any government to allow that to happen (end rising property prices), so they will prevent it using any means possible. That’s why it really is a ‘safer’ investment. So many people are on the gravy train that the driver would get lynched if it didn’t keep on going faster and faster (to use a shit analogy).”

    It’s going to be fascinating to watch what happens when they run out of the “means possible” . And subsequently the means impossible. Nothing’s forever.
    I’ve been a bystander as Spanish property went into free-fall. Enormously entertaining.

  41. David

    OK in the round the ow paid aren’t subsidising anybody. But any facility that provides more to an individual than a simple division of the whole cake and them their own tax contribution is a subsidy to them. The flip side being anybody who does not make the use of a public facility the share of the cake would suggest is subsidising that service. I don’t have school age kids, so.I am subsidising the education budget – something else government must provide.
    As regards health, what possible alternative is there? An unemployed man with a family couldn’t afford the price that would need to be charged to provide medical care to his kids, my mother-in-law has Alzheimer’s and we couldn’t afford the care. Should we refuse medical care if it can’t be paid for by the individual?

  42. bloke (not) in spain

    I find this very instructive. We start with a very particular benefit incentivises a certain form of investment. And very quickly the argument opens out to but…buts, including bloody near anything can be grabbed at. Sounds to me like something’s on very dodgy ground.

  43. A very particular benefit that incentivises a certain form of investment.

    That will be the mortgage interest breaks for landlords, the ones that don’t actually exist?

  44. bloke (not) in spain

    You’re right.
    It’s two incentives BtL’s get treated as a business for interest purposes but not a business for business rates. Unlike other rented accommodation.
    Underselling. (smacks wrist)

  45. @Ironman
    I think tax funded health care is a good idea so no
    “Should we refuse medical care if it can’t be paid for by the individual?”
    However you cannot say that and “tax is used to pay for things that need to be paid for and cannot be charged directly to the user’s. So military spending, health, welfare. And tax must be about the wealthy subsidising the poor”.
    As health care could be charged directly to the user.
    Sorry to be pedantic.
    FWIW is sorry to hear about your mother in law, I hope she lives long enough for cure to be discovered.

  46. Bnis

    Don’t understand. BTL LLs are treat as businesses.

    If I have an office I pay business rates.

    If I have interest as an expense I count it against my revenue, just as if I were a garage or supermarket.

    Tenanted properties are not business premises, so pay the (higher) Council Tax, which is incident on the LL through a lower rent.

  47. B (n) S

    Treating a business as a business isn’t a break of any sort, that’s Ritchieland logic. But not charging business rates, yes you win.

  48. bloke (not) in spain

    “BTL LLs are treat(ed) as businesses.”
    “Tenanted properties are not business premises,”
    So where’s the business taking place?
    In the BtL LL’s pocket?

  49. Healthcare could be charged to the user, often only in the sense that the invoice could be raised. Such are the costs of modern treatments though the rate of defaults and write-offs would make Wonga blanch.
    So we/socety decides to mutualise the cost. How else could we do it? (David.and I agree on this and I don’t suppose anyone disagrees)

  50. Hallowed Be

    Even rhetorically I wince at the idea of involuntary nine mil trepanning.

    That’s probably because you are a much nicer person than I am.

    But even my way is a lot more merciful that the Greenies insistence that we should all watch our best beloved die slowly of hunger and hypothermia for the sake of the purity of Gaia.

    Of course, if you are squeamish, you can use the 9mm in the back of one knee. I suspect any evil landowner would then sign over their property to the Knights of St Nathalie to prevent a second encouragement.

  51. “Healthcare could be charged to the user, often only in the sense that the invoice could be raised. ”

    Which is the way it works on much of the continent. Invoices passed around, either paid by the patient and (not, wholly, or fully) reimbursed by insurance or the social system, or paid by insurance / social system and then possibly a co-pay demanded of the patient.

    However, to most Brits, this is apparently an idea from outer space, despite it happening only 30 miles from Dover, in France.

  52. Surr Evil
    Now now, i’m not letting anyone get away with telling me how nice i am on the internet. Preference for less vivid rhetoric that’s all.
    Had Nathalie got the numbers and Nick F challenged her on cheapish land valuations, I don’t think she would have said “The land costs will be kept down by suggesting to the owners it’s not worth losing their kneecaps over.” but I suppose she might have.
    The slightly disappointing thing is that it would actually be interesting if we knew what the Greens under Bennett will do when their green ideas come up against liberal democratic principles such as compensating people at market rates for state confiscation of their property.

  53. “such as compensating people at market rates for state confiscation of their property”

    It’s not state confiscation, it’s taking into public ownership in an uncompensated fashion (/Ritchiebollocks)

  54. Right so government DOES fund health services on the continent. Why? Because all civilised societies understand the moment someone is turned away from healthcare because he can’t afford it then that society isn’t worth its own survival.

  55. @ Matt W

    “So if the teeny greenies take it away, assuming it can be done legally, then that’s about 100 per month average rent increase for half of renters.”

    Nope. If those renters could pay the extra £100 then they already would be. BLT is not a ‘cost plus’ pricing business.

    There are two identical BTL properties on a street. One is owned outright by the landlord, who bought it in 1974 for £2,000. the other is mortgaged to the limit by a landlord who paid £250k for it in 2007. Both landlords, like good little capitalists, wish to maximise their returns.

    What’s the rental value of each property?

    What makes you reckon that the second landlord could jack his rental up if his costs rose?

  56. So Much for Subtlety

    Ironman – “Right so government DOES fund health services on the continent. Why? Because all civilised societies understand the moment someone is turned away from healthcare because he can’t afford it then that society isn’t worth its own survival.”

    That is a bit of emotive nonsense. Health care needs to be rationed. Someone has got to do it. People will always be turned away because they can’t afford it.

    What we, the civilised countries, have decided to do is pretend that everyone can get all the healthcare they want. But in fact turn people away in secret. The decision is made for them by a committee they never see and the option is never put in front of them.

    Quite how this is more civilised I don’t know.

  57. “People will always be turned away because they can’t afford it.”

    Pure bollocks. There are many marks of a civilised society (not hiding criminals money for them is one btw). Providing a standard of healthcare regardless of ability to pay is another. I didn’t need to wonder which idiot would disagree; I already knew who.

    Britain doesn’t “pretend that everyone can.get all the healthcare they want” and.it.never.has. and it doesn’t turn.people away in secret. And the idiot who suggests we do is just bound to be the same idiot who sees no irony in introducing the word ’emotive’.

    That’s my lot; I’m not engaging with a clown like SMFS.

  58. So Much for Subtlety

    Ironman – “Pure bollocks. There are many marks of a civilised society (not hiding criminals money for them is one btw). Providing a standard of healthcare regardless of ability to pay is another. I didn’t need to wonder which idiot would disagree; I already knew who.”

    That is an odd comment on hiding criminals. I am not sure about that. But either way, either you have walked back from your original claim (a “standard” of health care? Not what you originally said, depending on how you are using that word) or you are wrong.

    “Britain doesn’t “pretend that everyone can.get all the healthcare they want” and.it.never.has. and it doesn’t turn.people away in secret. And the idiot who suggests we do is just bound to be the same idiot who sees no irony in introducing the word ‘emotive’.”

    I kind of think we do so pretend. You certainly seem under the illusion we do. But we don’t. That is what NICE is for. They ration health care. Some treatments are just very expensive. You as an individual might be able to afford them, you as an individual might decide they are worth it, but NICE is there to make a decision for you – and without telling you. So patients are not told “We have this new drug but it is a bit too expensive so the government won’t pay for it”. They are told “There is nothing more we can do for you”.

    Health care is one of those things we could spend all the money in the world on if we wanted. We don’t. We ration it. Everyone does. Quite why you think it is more civilised for this to be done quietly by a Qango rather than openly by individuals is beyond the ken of moral man I fear.

    The system works exactly as I described it.

  59. @bnis

    “BTL LLs are treat(ed) as businesses.”
    “Tenanted properties are not business premises,”
    So where’s the business taking place?
    In the BtL LL’s pocket?

    The LLs business takes place wherever the LL runs it.
    It is just a fact that the system treats normal residential rentals as residential properties for the purposes of Council Tax, since the liability is on the occupier.

  60. bloke (not) in spain

    The .gov website says:
    “Business rates are charged on most non-domestic properties, like:



    holiday rental homes or guest houses, eg a boarding house
    You’ll probably have to pay business rates if you use a building or part of a building for non-domestic purposes.”

    There’s nothing substantive in the difference between a holiday let or even a hotel. i’ve certainly rented a hotel room for 6 months (in Central London, cheaper than a 6 month letting) So what was the difference between renting a room with bathroom & cooking facilities & renting a room with bathroom & cooking facilities?
    If the BtLer’s rental property isn’t being regarded as the place where business is conducted then ,presumably, if they’re not using a dedicated office their home is. If BtL forms a substantial part of their income -someone I know owns over a dozen in London. part of a very substantial income – then that must constitute a “business premises”. Mustn’t it?

    Looking from outside there’s little logic to it. Apart from a cheap ride for BtL.

  61. I thought business rates were higher due to the amount of resources used. Rates cover (or used to cover, depending on region) things like water usage and sewage processing and rubbish disposal, and a shop with twenty employees using four toilets that gets its floors washed every night and throws away two tons of packaging a week uses a lot more of them than a house with three people living in it. A shop in an urban shopping district also gets the street outside it cleaned a lot more than a residential house would.

    If that is the reasoning (and I really thought it was), it will be interesting to see whether the introduction of water metering leads to a reduction in business rates. [hollow laugh]

  62. I suspect the effect of taxing interest on BTL mortgages would be a retraction in the rental market as it becomes less affordable to let out.

    This would result in higher rents due to lower supply. So the policy would undermine the goal that it seeks (provision of low cost rentals). And half a million new council homes won’t be built in a day

  63. bloke (not) in spain

    @SQ2
    “a shop with twenty employees using four toilets that gets its floors washed every night and throws away two tons of packaging a week ”
    It’s obvious you’ve never had commercial property. Not only is waste collection not covered by the business rate but one’s obliged to have a contract with an authorised waste collection service.
    @Sandman
    What you’re saying would work if the supply end of property was open. Unfortunately, it’s effectively closed. So the imposition of tax on BtL mortgages would just make BtL’s less attractive an investment, less money would be chasing the fixed amount of properties & property prices would weaken. Thus allowing a proportion of those currently obliged to rent to be able to afford to buy.

  64. NICE is there to make a decision for you – and without telling you. So patients are not told “We have this new drug but it is a bit too expensive so the government won’t pay for it”. They are told “There is nothing more we can do for you”.

    First, NICE decisions on which drugs to fund are in the public domain. Second, almost all useful drugs do get funded in the end, because it’s in the manufacturers’ interest to sell the drugs at any price above the marginal cost of production, and it’s in NICE’s interest to fund treatments that work for sick people.

    The whole thing is of course daft. The global system of funding drug development through intellectual property rights is insane. But that’s another story…

  65. What I understand from this thread is that for NICs purposes rental income is classed as investment income and therefore exempt from NICs; for income tax purposes it’s earned income and therefore has allowable expenses including mortgage interest. Council tax is charged not business rates unless it’s a holiday property. Doesn’t seem coherent.

  66. There’s also the small distortion that full business rates don’t apply until the rateable value is £12k, and are zero below rateable values of £6k.

    Have a mate starting a 6000sqft gym who will be paying £1k a year.

    Also of course much rental residential property is owned by companies.

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