Some time ago we brought you the news that changes were coming to the amount of tax relief landlords could claim.
A number of the changes the government is set on introducing could have significant effects.
So, we thought we’d bring you this quick reminder and update on what’s coming.
The Main Changes
Mortgage Interest Tax Relief is being limited to 20%. This will be implemented in stages over the next few years. By the time this process is finished (2020) a buy to let landlord will pay full tax on any profits made from letting. With tax relief on mortgage interest only being given at 20%.
Wear and Tear Allowance is also being changed in ways that will affect landlords bottom line. The government will no longer allow 10% of rental profits to be written off as “notional wear and tear” on furnishings. Instead, tax relief will only be granted on actual replacement costs incurred, for which a receipt will have to be produced.
Additionally, the government is changing the way Capital Gains Tax works for selling properties. From April 2019, this tax will need to be paid on any gains within 30 days of selling the property. This could put sellers in a tough spot if the buyer cannot produce the cash immediately, as they will still be required to pay Capital Gains Tax within 30 days.
Is There Anything I Can Do?
As we mentioned in the last article, there are some steps that landlords are taking to try and mitigate the effects of these changes. Some of them may be more effective than others, and of course, you must consider your own personal situation when deciding which, if any, of these methods, might be for you.
If you’re not clear on how best to proceed, why not get in touch with us here at K.A. Farr & Co, Chartered Accountants? We ensure our clients’ tax affairs are settled in the most advantageous manner possible, so get in touch today by calling 01704 211 434 or filling in our online contact form.