The Government faces a legal challenge as two landlords looking to fight increase in taxes on buy to let investments raise over £50,000 in less than ten days via a crowdfunding platform.
Chris Cooper and Steve Bolton have already secured the support of more than 740 donors following the launch of their campaign on Boxing Day, via crowdfunding website Crowd Justice.
The private landlords are looking to secure a judicial review of specific clauses on the Finance Act 2015, through which the Government installed changes which prevent landlords from being able to offset mortgage interest costs against rental profits before tax is calculated.
Thousands of buy to let landlords will see earnings hit following the Chancellor’s announcement in July which specified that the amount landlords can claim as relief will be set at the basic rate of tax - currently 20%.
Some current basic-rate taxpayers will also be hit, because the change will push them into the higher-rate tax bracket.
Already a parliamentary petition to scrap the changes, which was launched this summer, has secured almost 50,000 signatures and the National Landlords Association has warned that the changes could have adverse effects and “add billions to rent”.
Campaigners Chris Cooper and Steve Bolton, said:
“As a result of this change, many thousands of people will find themselves being taxed on loss-making buy to let properties, see massive increases in the percentage of tax payable and many will find that they will be pushed upwards into a higher tax bracket, even though they may well not be making a single penny of extra profit!”
They hope to argue their case to the government in a “pre-action protocol letter” this month, with a formal application for judicial review later this year.
The Government would then have 21 days to respond to the application before a court decides whether it is granted.
If approved, a hearing would then be scheduled by the court, after which a ruling would be made.
Mortgage interest relief is estimated to cost £6.3billion a year, as revealed by a Freedom for Information request last year.