Human rights legislator and the wife of a former Labour Prime Minister, Cherie Blair, has launched a legal battle against the Government over their bid to increase taxes on buy-to-let investments, arguing that the leading policy breaches the rights of would-be landlords.
In a strongly worded letter addressed to HMRC, Mrs Blair laid out the EU human rights legislation on which she hopes to overturn the Tories’ planned property tax in court.
First announced in last year’s summer budget, the Government’s initial bid aims to prevent small-scale landlords from deducting mortgage interest costs from their rental income before calculating taxable profits.
According to Treasury forecasts, the hike is estimated to net the Exchequer approximately £1 billion per year by 2021, and is crucial to the Government’s initiative to grow home ownership and help the young to buy property.
The bid, part of the Finance Act 2015, has been welcomed by housing charities and groups representing tenants.
However, Blair argues that the policy discriminates against individual buy-to-let investors, by denying them the same rights free to virtually all other business owners.
This includes corporate landlords such as insurance companies, who can continue to “set their finance costs off against their income and be taxed only on their profits”.
Whether from Mrs Blair or elsewhere, any successful challenge to the tax at this stage could be extremely embarrassing for George Osborne, who has repeatedly asserted how he wishes to “level the playing field” between homeowners and the rising number of landlords in the UK, which is estimated to be around two million.
The case, fronted by Mrs Blair and human rights lawyer Adam Smith-Anthony is currently being funded by a group of 737 individuals, including various high profile landlords and letting agents.
The Government has 14 days in which to respond to Blair’s letter, after which the matter will be escalated to a judicial review for courts to rule on whether or not the legislation is valid.