Chancellor George Osborne is set to be challenged in court by two landlords over planned tax changes.

The changes, to be phased in, will cap the amount of mortgage interest relief that buy-to-let borrowers can set against tax.

The new policy (Section 24 of the Finance Act 2015) will also prevent landlords with mortgages from offsetting mortgage interest costs against rental profit before calculating tax.

The landlords, Steve Bolton and Chris Cooper, acting on behalf of 737 supporters, have been advised by law firm Omnia Strategy that they have a “reasonable change of success”.

A Pre-Action Protocol Letter has now been sent to HMRC, which had until this Wednesday to acknowledge.

An application for a judicial review will now be filed, with the Government having 21 days to file a defence.