Buy-to-let tax increase faces court challenge from Cherie Blair
The government's plans to increase taxes on buy-to-let property have been challenged in the courts by Cherie Blair's law firm.
Omnia Strategy has argued that George Osborne's Stamp Duty increase, which will come into force from April, will discriminate against buy-to-let investors by denying them the same rights as other business owners, according to documents seen by the Daily Telegraph.
The law firm, which QC Blair founded in 2011, noted that corporate landlords such as pension funds and insurance companies can continue to "set their finance costs off against their income and be taxed only on their profit".
The disparity breaches the European Convention on Human Rights, Omnia said, while the favouring of corporate landlords "distorts competition" and constitutes a form of state aid.
Blair and husband Tony, the former Prime Minister, last year were revealed to have built up a property portfolio of 34 homes worth around £25m.
The claimants also argued that, because mortgage interest will now effectively be viewed as income by HM Revenue and Customs, the Chancellor's proposals will move thousands of landlords from the lower income tax rate to higher rate even additional rate.
In November’s Autumn Statement Osborne announced a 3% surcharge on Stamp Duty on purchases of buy-to-let properties and second homes from April 2016.
Fresh data from the Bank of England on mortgage approvals for house purchases in December indicated demand was being boosted by buy-to-let investors looking to make a purchase before April, as had also been suggested by the Royal Institution of Chartered Surveyors' December survey.
Post April, economists expect the move may modestly dilute housing market activity and upward pressure on prices.
The Blair's burgeoning property portfolio was caught up in controversial in 2002, when Cherie admitted that convicted fraudster Peter Foster had helped her in the purchase of two flats in Bristol.
In a statement issued on her behalf by Downing Street, Blair insisted she had done nothing wrong in the purchase of the flats, for which Foster obtained a discounted price and denied she had any involvement in Foster's later deportation case.