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.

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