Tax Relief Changes May Mean Paying More Tax
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 have a Buy to Let mortgage, it’s important that you understand the changes and whether they will affect the tax you pay.
They will be introduced gradually from 6th April 2017 and will be fully in place by 6th April 2020.
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 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 all rental income will be considered part of gross income and will need to be included on your tax return. Depending on your personal circumstances, this may increase the rate of tax you have to pay.
For help with tax advice contact Tax Assist Accountants 01422 329941
For questions about buying, selling, renting then please contact Protheroe Property 01422 380013