s24, the restriction of finance charges, has been a big issue for landlords for coming up on ten years now.
Stats show that a larger percentage of houses being sold at the moment are former rented homes so it could be argued that at last Osbornes original plan of ensuring more homes are own by the people that live in them is starting to work. Or is it the RRB? Or EPCs? Probably a mix. Certainly the increase in sale of rented homes is increasing roughly in time with the introduction of the Renters Rights Bill. so it is entirely possible that s24 did nothing but push corporate ownership. in fact the numbers support that.
Many have now forgotten than Cherie Blair was part of an attack on s24 on the basis that essentially halving the relief for individuals put them at a disadvantage over companies that continued to get full relief.
One of the retorts there was that individuals and companies were being treated the same. Both were getting 20% relief. This response ignored entirely that 20% was less than half relief for some individuals and full relief for companies.
What happens now that we have moved away from fixed rates for companies and we have up to 26.5% rates? Well using the old logic those companies should have their relief restricted to 20%? Nope that hasn’t happened.
In fact it’s worth noting that s24 restricts to basic rate which happens to be 20% at the moment. It does not restrict to 20% directly. Now we are seeing calls to increase the basic rate tax rate do people need to worry about stretching out s24 for basic rate taxpayers? Probably not unless they change the way it works. If we have a 25% basic rate tax rate then s24 would restrict to 25%.
What does this mean? Well basic rate tapers would still get full relief but the perhaps unintended consequence is that higher rate tapers will be more relief! It won’t make huge difference but will certainly help. That is unless the treasury remember how much they hate landlords and change the law to ensure they don’t get this unintended benefit.