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Cherie Blair leads landlord fight against tax changes

4 February 2016

Lawyer Cherie Blair Lawyer Cherie Blair has lit the fuse in a long-running campaign to repeal new mortgage interest relief rules for buy to let landlords.

Blair, wife of former prime minister Tony Blair, has fired off a pre-action letter to The Treasury to trigger a legal challenge against the law change.

She argues that the law breaches landlord human rights as the new tax treatment of mortgage interest relief is not applied to any other businesses paying loan interest.

“I am sure we have a reasonable chance of success,” she said.

The Treasury has until February 10 to respond.

The issue can then go to the High Court for a judicial review.

The tax change comes in from April 2017 and alters the way landlords paying higher rate (40%) or additional rate (45%) income tax calculate their rental profits.

Instead of receiving relief for mortgage interest payments at their marginal rate of income tax, the amount tapers down to 20% over four years.

The measure was announced by Chancellor George Osborne in his Budget 2015 and is expected to raise an extra £1 billion a year in income tax from buy to let landlords from 2021.

The way rental profits are worked out also changes at the same time. Instead of including mortgage interest relief as a property business expense, profits become rents received less other business expenses with a 20% tax credit for mortgage interest paid deducted.

This subtle change increases the taxable rental profit for many landlords who currently pay basic rate income tax so more buy to let investors are caught in the tax net.

Leading the challenge are landlords Steve Bolton and Chris Cooper.

They have raised £50,000 to go to judicial review from 740 backers.

A petition was also launched against the tax changes, but only 60,000 signatures were collected when 100,000 were needed to force a debate before MPs in Parliament.

Click here for examples and government policy on mortgage interest relief