BTL Early Repayment Charge  Allowable Expense?

by Readers Question

10:00 AM, 25th November 2016
About 2 years ago

BTL Early Repayment Charge Allowable Expense?

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BTL Early Repayment Charge  Allowable Expense?

Apologies if this question has already asked but I am struggling to find clarity on the .Gov website.ERC

I am considering remortgaging a buy to let property which is currently still within its fixed term, doing so will incur an early repayment charge of £4k. Does anybody know if this early repayment fee is an allowable expense…note the early repayment charge will be incurred purely for refinancing purposes and will continue to be let with its current tenants.

Thanks.

Gary



Comments

Neil Patterson

10:03 AM, 25th November 2016
About 2 years ago

Hi Gary,

I have checked with Mark as he has done this regularly before and it is an allowable finance cost.

However you need to get this in before the section 24 rule changes in April.

gary dave

10:06 AM, 25th November 2016
About 2 years ago

Reply to the comment left by "Neil Patterson" at "25/11/2016 - 10:03":

Thanks for the reply Neil, very much appreciated!

Denise G

16:32 PM, 25th November 2016
About 2 years ago

what about if you pay an early redemption fee while clearing the mortgage early?

Michael Barnes

18:18 PM, 26th November 2016
About 2 years ago

Reply to the comment left by "D D" at "25/11/2016 - 16:32":

My understanding, from a conversation with an accountant a couple of years ago, is it is what you do not why you do it that counts for tax purposes.

Therefore if you incur a finance charge, then it goes into the tax calculation.

Tina O'Connor

20:19 PM, 20th February 2017
About 2 years ago

Reply to the comment left by "Neil Patterson" at "25/11/2016 - 10:03":

Hi Neil

Are BTL fixed term mortgage early repayment fees still an allowable expense against tax?

How have the Section 24 changes affected this?

Thank you

Tina

Mark Alexander

20:26 PM, 20th February 2017
About 2 years ago

Reply to the comment left by "Tina O'Connor" at "20/02/2017 - 20:19":

Section 24 affects all finance costs including early repayment charges
.

Tina O'Connor

7:28 AM, 21st February 2017
About 2 years ago

Hi Mark

Thank you for responding.

Are you saying that the early repayment charge is no longer an allowable expense?

Thank you

Tina

Michael Barnes

8:21 AM, 21st February 2017
About 2 years ago

Reply to the comment left by "Tina O'Connor" at "21/02/2017 - 07:28":

It is an allowable expense.
No change this tax year.
Next tax year it will be treated differently under S24.

Mark Alexander

8:26 AM, 21st February 2017
About 2 years ago

Reply to the comment left by "Michael Barnes" at "21/02/2017 - 08:21":

I concur, next year being post April 5th 2017 of course, the next Tax Year.
.

Tina O'Connor

12:37 PM, 21st February 2017
About 2 years ago

Reply to the comment left by "Michael Barnes" at "21/02/2017 - 08:21":

Hi Michael

Thank you very much for your comment.

Would you be able to recommend me an accountant who holds this view?

Thank you

Tina

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