The impact of the recent tax changes to buy-to let landlords

The Government has said it expects one in five landlords to pay more tax but there are things you can consider. It may be worth contacting our CHW Accountants in Bolton to explore your options.

Until April, 2017, landlords were able to claim tax relief for finance costs on buy-to-let mortgage payments when they complete their tax return, allowing them to offset mortgage interest against rental income.

However, the phasing in of mortgage tax relief restrictions began on April 1, 2017, with full implementation by April, 2020. Property investors who previously deducted costs incurred from their payable tax will be able to claim tax relief on their finance costs at the basic rate of 20%, regardless of what income tax bracket they fall into.

Therefore, those in the higher and additional rate bands will pay more tax.

There are elements that landlords can consider. For example, if you are a higher rate taxpayer with a spouse who does not work, consider transferring a beneficial interest in the property so that rental income can be received by them. This allows them to maximise their tax-free personal allowance, and basic allowances, thereby reducing the total tax payable.

As limited companies are not affected by the changes to mortgage interest tax relief, landlords have increasingly been looking to incorporate. However, there can be significant tax implications such as Stamp Duty Land Tax and Capital Gains Tax and it is imperative that expert professional advice is sought before going down this route.

It is also worth reviewing mortgages on buy-to-let properties to ensure that rates are competitive.

If you’d like more information on this matter, please don’t hesitate to contact our Accountants in Bolton either via our online enquiry form on call us on 01204 534 031.


This article is for general guidance only. It provides an outline, and may not include points which are important to your situation. You should not depend on this blog without taking advice based on the full facts of your case. The information given was correct at the time of publication.

DID YOU FIND THIS USEFUL?

Share it with your network:  

Want more great content?
Sign up to our newsletter

    Follow us

    Tweets by @CHW-accounting

    CHW-Accounting
    @chw-accounting


    Twitter: chw_accounting

    Read enough?

    Want to find out how we can help you and your business? Get in touch today and let's have a chat.

    WHAT'S THE NEWS?

    Grab a biscuit and a brew and read our latest news.

    19 February 2024

    Tax changes – What’s new in 2024?

    by

    We are now well and truly into 2024 and before you know it the end of the 2023/24 tax year on 5 April will be upon…


    Read more >

    12 February 2024

    National minimum wage – a quick guide to the...

    by

    The government sets a national minimum wage and a national living wage to guarantee that workers get a minimum standard of pay. It is a legal…


    Read more >

    7 February 2024

    HMRC to target undeclared dividend payments

    by

    HMRC have advised the Chartered Institute of Taxation (CIOT) that they have commenced a ‘One to Many’ letter campaign directed at taxpayers who HMRC suspect may…


    Read more >

    7 February 2024

    One week on from Self-Assessment deadline

    by

    We are now a week on from the self-assessment filing deadline of 31 January and figures show that more than double the number of taxpayers failed…


    Read more >

    5 January 2024

    Cut to National Insurance from 6th January 2024

    by

    From Saturday 6 January, the average earner will be almost £450 a year better off according to the government.  However, the reality is that due to…


    Read more >

    YOUR CHALLENGES

    No matter what your challenge is, we’ve probably dealt with it before.



    Need an Accountant?

    Get in touch >


    Need an Accountant?

    Get in touch >


    Tax issues?

    Find out more >


    Tax issues?

    Find out more >


    Trying to grow your business?

    We can help >


    Trying to grow your business?

    We can help >


    Managing cashflow?

    We can help >


    Managing cashflow?

    We can help >


    Starting a business?

    We can help >


    Starting a business?

    We can help >


    Looking for funding?

    Need help with funding? >


    Looking for funding?

    Need help with funding? >


    Buying or selling a business?

    We can help >


    Buying or selling a business?

    We can help >


    Adopt the cloud?

    We can help >


    Adopt the cloud?

    We can help >


    What else can we do for you?

    We can help >


    What else can we do for you?

    We can help >
    CONTACT US

    Get in touch, no hard sell, just a brew, a biscuit and a chat.