DOUBLE WHAMMY FOR LANDLORDS Interest Rate Rises AND Section 24

DOUBLE WHAMMY FOR LANDLORDS Interest Rate Rises AND Section 24

9:52 AM, 18th August 2022, About 2 months ago

Text Size

Until the recent interest rate rises started to bite into cashflow, many larger portfolio landlords had taken the decision to pay the extra tax resulting from the Section 24 restrictions on finance cost relief as opposed to restructuring their business. It might be said that the level of pain they were enduring from Section 24 wasn’t enough, but for many more, IT IS NOW!

There comes a point for everyone when they have to admit to themselves “enough is enough”.

These landlords can no longer bury their heads in the sand. Either they take advantage of the buoyant property market to exit the business altogether or make other radical changes to the ownership structures of their property rental businesses. Either way, they desperately need some good quality tax advice.

If they sell their rental properties now they could be hit with a huge Capital Gains Tax bill. If they change their ownership structure without professional advice the financial consequences could be even more catastrophic. An age old saying is that “if you think professional advice is expensive, wait until you try using an amateur or advise yourself”.

Since the beginning of this year, the Bank of England has increased base rates from 0.1% to 1.75%. This equates to an annual loss of £16,500 of cashflow on every £1,000,000 landlords have borrowed. To make things worse, this additional expense can no longer be offset against rental income. Instead, an additional tax credit of just £3,300 (20% of the increased finance cost) is applied, based on the same example.

Some landlords will not have felt the pinch quite yet, because their mortgage interest rates will be fixed. However, when those fixed rates expire they will find themselves in a new World of pain.

At what point will YOU be saying “enough is enough”?

Book a Landlord Tax Planning Consultation

  • Hidden
  • Hidden
    Please provide an overview of your circumstances and what you are looking to achieve.
  • For the avoidance of doubt, we are able to assist landlords who own properties in England, Northern Ireland, Scotland and Wales. Where you reside is not a problem, even if you are resident outside the UK.
  • Landlord Tax Planning Consultancy is the core business activity of Property118 Limited (in association with Cotswold Barristers).


Landlord Tax Planning Book Now