Featured, Mortgage Guide
In 2015 the Government announced changes to tax relief on rental income from residential properties, which means that landlords may pay more tax in the future. If you do have a Buy To Let mortgage, it’s important that you understand the changes and whether they will effect the tax you pay.
They will be introduced gradually from 6th April 2017 and will be in place fully by 6th April 2020. Below is a short guide, but to see more detailed information please follow the link here to the HMRC website.
How tax relief is changing
At the moment, landlords can claim tax relief on finance costs such as mortgage interest payments , so they can offset the full amount of interest against their rental income when they calculate tax on profits.
Under the new rules, tax relief on finance costs can only be claimed at the basic rate, currently 20%, even if the landlord pays tax at a different rate.
You may need to pay more tax
These changes mean rental income will be considered part of gross income, which may increase the rate of tax you have to pay. This depends on your personal circumstances, but you should check:
How the changes will affect landlords
Contact a tax adviser
We recommend you seek advice from an independent tax adviser and start planning now, so you have things in place by next April.
We cannot offer you advice on these changes and what they may mean for you, but if you have any questions about your mortgage, please contact us here for a free review.
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