Base Rate Cuts – A Bonanza for Buy-To-Let Landlords!

The decision by the Bank of England to reduce the base rate to 2% last Thursday will prop up the treasury coffers with an additional £400million. This was the findings of the Young Group, a company providing a service to landlords.

The firm estimates that each reduction of 0.5% in the base rate will enrich the Chancellors coffers by an extra £80 million coming from taxes paid by landlords.

Landlords profit on rental income in most cases is taxed at the rate of 40%. This means that the drop from 5.5% to the current 2% rate will generate an additional £1billion of income for landlords. And this could ultimately result in an additional £400 million in taxes for the government.
 
Young Group has calculated that about £136 billion of the outstanding buy-to-let mortgages, 30% being tracker products have seen interest rates drop automatically with the lowering of Bank of England’s base rate. Each cut in base rate will go a long way in helping to boost landlord’s cashflow, but it will ultimately mean more in taxes. Therefore it is essential that you consider using websites such as property tax portal to learn about ways to minimise your taxes. 

Did you know?

Our property management software, landlords property manager professional, will automatically calculate your landlords tax liability? You simply enter all your property related income and expenditures and then run the income tax report. It will automatically calculate which tax band you fall into and then calculate your tax liability.