Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will make an assessment of the potential merits of reviewing buy to let tax relief in the context of the difference in mortgage interest cost for a limited company and a private landlord.
Property income for unincorporated landlords is taxed through the Income Tax system and is taxed through the Corporate Tax system for incorporated landlords. The Income Tax and Corporate Tax systems are not directly comparable, as they offer different rates of tax and reliefs, reflecting the different nature of the taxpayers.
From April 2017 to April 2020, the Government phased in a restriction of deductions for finance costs for landlords of residential properties to the equivalent of the basic rate of Income Tax. The restriction makes the tax system fairer by ensuring unincorporated landlords with higher incomes no longer receive the most generous tax treatment. As with all aspects of the tax system, the Government keeps these reliefs under review and will set out any reforms at a future fiscal event.