Buy to let investors’ legal challenge against tax hike blocked

Property tax

A legal challenge from private landlords to block incoming changes on mortgage tax relief has been rejected by London’s High Court.

The case, brought forward by landlord lobby group ‘Axe the Tenant Tax’, and represented by Cherie Blair QC (known professionally as Cherie Booth), aimed to overturn incoming tax rules, which will prevent landlords from claiming higher rate tax relief on their mortgage interest payments in a move that’s being phased in from April 2017.

Axe the Tenant Tax argues that the rule change denies individual landlords the same rights as businesses, which are only taxed on the profit they make, and not their turnover. Landlords who operate through limited companies will continue to be able to claim mortgage relief as a business expense after the changes.

The group claimed the new rules are “unfair and unlawful”, and requested a full judicial hearing. Ms Blair, whose family is reported to have a 37 property rental portfolio, described the proposed rules as “manifestly unfair”.

But Justice Dingemans dismissed the challenge, ruling it “arguable”.

 

Following the hearing, Mrs Blair said: “The Court’s decision that our clients’ legal challenge should not proceed is very disappointing. We know the case has been supported and followed with interest by a large number of individual landlords. Many of these landlords now face challenging times ahead.” If you a landlord and want to know your options and how you might be affected, read our piece How to move on from buy to let

Axe the Tenant Tax vows to continue its petition against the new mortgage tax relief rules. It has seven days to appeal the Court’s decision.

Mrs Blair added: “From the outset, the legal process was just one aspect of our clients’ fight against this unfair measure. Together with their impressive and growing coalition, they will continue to engage with the Government, and the legal team wishes them every success.”

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