Landlords: plan now for interest relief restrictions

Landlords: plan now for interest relief restrictions

April 2017 saw the start of major change in the way individual landlords are taxed, though the full effect will not be felt until 2020/21.

Landlords can no longer deduct all the cost of finance (such as mortgage interest, interest on loans to buy furnishings, or fees incurred taking out or repaying loans or mortgages) from property income. Instead, only a proportion will be allowed. For the 2017/18 tax year, the proportion drops to 75%, with 25% given as a basic rate deduction. Further reductions are to come.

Tip

The change may push basic rate taxpayers over the threshold where they become higher rate taxpayers. The key point is to plan ahead and compute by how much your income will increase year on year as a result of the restrictions. Please contact us if you would like further advice.

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