Chancellor hits landlords for billions! How will this affect your cashflow?

by Mark Alexander

18:24 PM, 8th July 2015
About 5 years ago

Chancellor hits landlords for billions! How will this affect your cashflow?

Make Text Bigger
Chancellor hits landlords for billions! How will this affect your cashflow?

Chancellor hits landlords for billions

How much worse off might you be as a result of the limitations on claiming BTL mortgage interest as a taxable expense?

We’ve built a calculator to help you work it out.

First of all, allow me to explain the issue ….

Tax relief on Buy-to-Let mortgages is to be reduced to the basic rate of tax phased in over four years commencing 2017.

The Bank of England recently reported that Buy-to-Let mortgage balances amounted to circa £200 billion.

Assuming an average interest rate of just 3% that equates to interest of £6 billion a year.

Given that most landlords are likely to be 40% tax payers (or soon will be!) the loss of 20% tax relief for 40% tax payers means that landlords are likely to be around £1.2 billion a year worse off as a result of the Summer 2015 budget.



Comments

Ian Ringrose

15:28 PM, 28th July 2015
About 5 years ago

Reply to the comment left by "Barry Fitzpatrick" at "28/07/2015 - 14:15":

=> “20% of the lower of the finance costs or the profits of the property business in the tax year”

By using that wording, the HMRC stops a loss being created and taken forward to the next tax year; there is a different system for taking forward unclaimed interest relief. (Remember it is “profit” before finance costs.) It also stops people claiming relief on interest for properites they have left empty.

1 4 5

Leave Comments

Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.

Forgotten your password?

OR

BECOME A MEMBER

Covid-19 Code of practice for commercial landlords and tenants

The Landlords Union

Become a Member, it's FREE

Our mission is to facilitate the sharing of best practice amongst UK landlords, tenants and letting agents

Learn More