Armed forces personnel who rent their homes out whilst stationed away are being hit by the Government’s tax hikes on private rented housing.

A Royal United Services Institute report said “taxation on rental income and recent changes to ‘buy-to-let’ legislation makes this increasingly financially difficult for service personnel.”

Some 59 per cent of married members of the armed services own their own home, and tax increases will affect those who rent this out when they are posted either abroad or elsewhere in the UK:

The increases introduced over the last two years include taxing a landlord’s rental income, rather than their profits, a phased reduction in mortgage interest relief to the basic rate and reduced ability to reclaim the costs of wear and tear.

David Smith, policy director for the Residential Landlords Association, said: “The report is yet another indictment of the Government’s confused approach to the taxation of private rented housing which is leading to a loss of affordable homes.

“The country will rightly be angered that armed forces personnel wanting to rent property out whilst on active service are being hurt by this needless, ideologically driven assault on rental housing.

“Faced with a severe housing crisis we need a tax system that supports growth and encourages the provision of the new homes to rent we need to meet rising demand.

"It is time for the Treasury to think again.”