Section24 impact on 2016-17 payments on account?

Section24 impact on 2016-17 payments on account?

8:53 AM, 19th December 2017, About 7 years ago 3

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With the Self Assessment tax deadline for 2016-17 looming, I would like to know, as a portfolio landlord subject to making payments on account, whether the S24 switch from taxing turnover as opposed to profits could restrict my personal allowance entitlement already based on the income (turnover) declared on my 2016-17 tax return?

I have seen a number of case studies comparing the impact prior to April 2017 with the position come 2020. But what is the situation in this first year of S24 mortgage interest restriction regarding the calculation switching to turnover from profit, and on immediate cash flow if 2017-18 payment on account is not based on profits declared in 2016-17?

Many thanks


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Neil Patterson

9:03 AM, 19th December 2017, About 7 years ago

Hi Paul

As property118 readers know the impact of Section 24 mortgage interest relief restrictions are being phased in over the 4 years so you can work out what your tax liability for each year will be.

However, payments on account to HMRC are impossible for anyone else other than your accountant to advise on as it depends on your previous position eg retained losses, over and underpayments, other income levels and allowances etc.

I don't even bother trying to work out mine and leave it to my accountants as I am nearly always wrong!

As a portfolio landlord I would always recommend a good accountant that understands property tax as they will save you at least what they cost normally and as you are obviously affected by Section 24 and have multiple properties it is worth considering a tax consultation with Mark. Please see our main tax planning page >>

Tobias Nightingale

12:44 PM, 19th December 2017, About 7 years ago

Reply to the comment left by Neil Patterson at 19/12/2017 - 09:03
Hi Neil,
Regarding Sec 24 you may or may not be interested the labour MP Ruth George seemed to speak against it yesterday: the following quote '
On the subject of universal credit, whether or not homes are fit for human habitation, unfortunately landlords are not prepared to rent. A representative of a lettings agency came to my surgery just last week and showed me the books for its tenants. At the moment, 20 tenants are on universal credit—we still have not seen it rolled out—of whom 18, or 90%, are in huge arrears. Nine of them—45%—have had to be evicted because landlords cannot get any redress for arrears. They cannot afford to see those arrears build up. Now that they no longer claim mortgage interest relief, they know that they will have to pay a big tax bill come the end of January, so they need to ensure that they can make their homes pay.'

Gary Dully

22:40 PM, 20th December 2017, About 7 years ago

Reply to the comment left by Tobias Nightingale at 19/12/2017 - 12:44
She should have said that the landlords tenants will have a large tenant tax bill to pay via massive increases in their rents over the next 4 years.

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