Summer Budget 2015 announced changes to the way in which some landlords of residential property get tax relief for their mortgage interest and other finance costs. The changes came into effect from April 2017 and so the first tax year that will be affected is 2017/2018.
Landlords who let residential property as an individual or in a partnership or trust will see the tax relief they receive for their finance costs restricted to a basic rate tax deduction by April 2020. The changes do not affect companies and landlords of qualifying furnished holiday lettings.
The restriction will be phased in over the tax years 2017/2018 to 2019/2020 and landlords need to be aware of the rules for claiming tax relief during this transitional period to ensure their tax returns are completed correctly.
Individuals whose tax bills will rise as a result of the changes may be able to undertake planning now to minimise the effect of the changes and we would urge anyone affected to seek professional advice sooner rather than later.
If you wish to discuss, please contact Richard White, Rugby on 01788 539000 or Amy Read, Leicester on 0116 261 0061.