|The Intergenerational Fairness Index takes nine indicators that most affect young people’s lives and outlook – unemployment, housing, pensions, government debt, participation in democracy, health, income, the environment and education – and puts them together to create an aggregate of how things have changed over the past 20 years. |
UK taxpayers are
subsidising buy-to-let landlords with £5bn a year because of loopholes that
allow rental income and capital gains on property sales to be exempt from
taxation, according to new research.
Intergenerational Foundation, in a report published on Monday, outline the ways
that tax on rental income and capital gains can be avoided legally and the
estimated cost of each.
The report argues that the growth of BTL investment by older people has come at a high price for
young people with almost two-thirds of landlords in the 46-65 year old age group.
BTL investors receive a number of unfair subsidies including tax relief
on mortgage interest, tax
relief on wear and tear (10% of rental income for furnished properties , tax relief on letting agents’
fees and tax relief on buildings and contents insurance, which are
not available to other owner
Ashley Seager, IF co-founder, commented: “It is clear that most of these
tax write-offs go to older
landlords, keen to take advantage of both the lack of housing supply and the demand for properties
to rent by the under-35s (52% of all private tenants.”
The foundation received information from the Revenue
& Customs for the 2010-11 tax year, and found that 1.2m landlords claimed £13bn
as deductions against taxable income, of which just under half, £6bn, was in
respect of interest. Landlords also received another subsidy of £2.52bn by
claiming repair and depreciation expense, while other deductions from income
included legal and estate agency fees, insurance and ground rents.
The calculation of the value of the annual tax break
assumes that all landlords pay higher rate taxes.
If a landlord occupies a BTL property for as little
as six months in the 36 months prior to its sale, gains accrued on the property
in that period are not subject to capital gains tax
The IF says BTL has seen returns on investment
increase threefold between 2000 and 2012,
out-performing equities, property equities and bonds.
Its favourable tax status means that
investing in BTL has been a rational
decision for many older people frustrated by
low returns on traditional pension savings.
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