Our website uses cookies to enhance the visitor experience (what's a cookieCookies are small text files that are stored on your computer when you visit a website. They are mainly used as a way of improving the website functionalities or to provide more advanced statistical data.). Are you happy for us to use cookies during your visits?
Please note: continuing without making a choice equates to giving us your consent, which you can withdraw at any time via our cookies policy page.

 

Restriction of tax relief on finance costs for individual landlords


Newsletter issue - November 2016.

New provisions will take affect from April 2017, which will see tax relief for finance costs on residential properties being gradually restricted over a period of three years, until, by 2020/21, all financing costs incurred by a landlord will be restricted to the basic rate of income tax.

Such finance costs include mortgage interest, interest on loans to buy furnishings and fees incurred when taking out or repaying mortgages or loans. No relief is available for capital repayments of a mortgage or loan.

Landlords will no longer be able to deduct all of their finance costs from their property income to arrive at their property profits. They will instead receive a basic rate reduction from their income tax liability for their finance costs. Whilst the restriction is being phased in, relief for each year will be as follows:

The restriction does not apply to companies or furnished holiday lettings.

Major concerns have been expressed over these changes, including the formation of the campaign group 'Axe the Tenant Tax' who claim that the legislation will result in a substantial increase in rents for tenants and worsen the current UK housing crisis.

Led by Cherie Blair QC, landlords Steve Bolton and Chris Cooper took their case to the High Court on 6 October 2016, to argue that they should be granted a judicial review of the law but they were denied permission for a full hearing. Speaking outside the court, following the decision not to grant permission for the case to proceed any further, Blair said 'landlords face challenging times ahead'.

Those opposed to the changes say that the rules do not take account of the fact that the landlord takes the risk of property ownership, including repairs, vacancies and potential non-payment. The group will continue to push the case to government.

The landlords' next step is to launch a range of lobbying, media and grass-roots activism measures which will include asking landlords to write to tenants if rents have to be increased informing then the government has forced them to take this action.

 

 

Request a callback from Mapperson Price

Our philosophy is to provide a professional friendly service to local people, including employed, self-employed and small to medium sized businesses. Fill in our callback form and we'll contact at a suitable time for you.

The partners are supported by staff with a range of experience in accounts, taxation, payroll, and company secretarial work to support the various services the firm offers.

REQUEST CALLBACK

We always aim to get it right first time, every time, we'll respond to you as soon as possible after your form has been received by us.

 


Newsletter Icon

Newsletter Sign up

Handy tax tips delivered directly to your email inbox