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

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

18:24 PM, 8th July 2015, About 6 years ago 41

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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

by Ian Ringrose

15:28 PM, 28th July 2015, About 6 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.

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