Published on 22 May 2016
Hannah McCartan of https://www.mccartanlettings.co.uk talks about the changes to the tax relief landlords get from April 2016.
One of the biggest changes that landlords really need to start planning for right now is the withdrawal of the interest element of a mortgage being offset against your tax.
This change will come into effect in April 2017 so we have a year from now to start planning. When it starts in April 2017 it will be introduced in 25% incremental steps so that in 2020 there will be zero tax relief for the interest part of the mortgage.
Most certainly higher rate tax payers need to get accountant and tax advice now as there are certain instances where a landlord may be in a position they may be paying more tax than they receive in rental income! Which is a very scary prospect.
Lower rate tax payers seriously need to be looking at their 5 year plan as it could be pushing lower rate tax payers into the higher rate band.
Again they will be paying more tax than what they were expecting to be paying and cash flow is absolutely critical and making sure you can pay your tax.
But more importantly, if you are being hit with larger tax bills, are you going to have enough money left over for your maintenance and your regular safety inspections?
So our advice is please get professional tax advice now to ensure you don’t have any shocks in the future.