Tax changes for Landlord – 31st January

Tax changes ahead – a timely intervention with the deadline for self-assessment tax returns from landlords being January 31.

Tax changes for Landlord – 31st January

Landlords have previously been able to claim 100 per cent Mortgage Interest Relief (MIR) for rental properties, but this year that has been reduced to just 75 per cent with the remaining quarter of mortgage interest qualifying for 20 per cent tax credit.

The phased reduction, over four years, will see MIR disappear completely by the end of 2020, with the entirety of mortgage interest instead qualifying for 20 per cent tax credit.

If landlords are in a higher tax bracket, they won’t get all the tax back on their mortgage repayments, as the credit only refunds tax at the basic 20 per cent rate, rather than the top rate of tax paid.

This change will also push many landlords with buy-to-let mortgages up a tax band, despite their income not increasing, as tax will be applied to turnover instead of profit.

Changes like these will see additional costs, landlords may increase rents or cut back on maintenance, damaging the quality of the rental stock available.

< Back to blog