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

by Mark Alexander

18:24 PM, 8th July 2015
About 4 years ago

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

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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.

How much worse off will you be?

Step 1 of 2

  • If you are a 40% tax payer this is how much extra tax you might have to pay. This is not a comprehensive analysis because you may pay some tax at the lower 20% rate and some may even fall into a higher rate bracket.

    Need some help?

    Before you consider selling up or moving properties into Limited Company structure you need to carefully consider the ramifications of Capital Gains Tax and other tax planning and money saving opportunities available to you. To learn more please click the NEXT button below


Ian Ringrose

15:28 PM, 28th July 2015
About 4 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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