Landlords are reminded that there is only six months left until the government begins restricting the amount of finance cost relief available.
Buy-to-let landlords are warned that the government’s measure to gradually restrict finance cost relief will be in place by April 2017. The first cut of 25% will begin the restrictions on residential properties to the basic rate of income tax. The subsequent cuts will be fully in place by April 2020.
These finance costs include mortgage interest, interest on loans to buy furnishings and fees that incur when taking our or paying back these mortgages and loans.
Landlords will be able to deduct 75% of finance costs from their rental income in the tax year 2017/18 and use the basic rate tax reduction. This will then be restricted to 50% in 2018/19 and then 25% in 2019/2020. By 2020/21, buy-to-let landlords will not be able to deduct any finance costs from their rental income.
This measure has not been received well; however attempts to stop the motion were rejected.
We do encourage you to read our detailed explanation of this tax change: http://www.myersclark.co.uk/blog-post/pros-and-cons-incorporation-buy-let-landlords