The next step in changes to tax relief for landlords takes effect from 6 April 2019

If you have a mortgage on a buy to let residential property, from this April only 25% of the interest can be offset against your rental income, with the remaining 75% qualifying for a 20% tax credit only.

For a higher rate taxpayer, that will mean £50 less tax relief for every £1,000 of interest in 2019/20. And from April 2020 onward, you will only receive a 20% tax credit – another £50 cut in relief for every £1,000 of interest for 40% taxpayers.

If these changes make you think about selling up, then remember another April 2020 change: capital gains tax (CGT) at up to 28% on residential property will be due within 30 days of sale.

And there’s more.

From 6 April 2020, Private Residence Relief (PRR) will also reduce from 18 months to just 9 months, meaning you will only be able to claim CGT relief on the last 9 months before selling a second property. This could dramatically increase your CGT bill when it comes to selling your second residence or rental property.

Lettings relief is also changing next year. From 6 April 2020, lettings relief will only be available to landlords who share occupancy with a tenant or tenants, it will not be paid for periods in which the landlord has moved out of the property, effectively abolishing it for buy to let purposes.

For more information on the available tax relief for landlords, get in touch and we’ll be happy to review your individual circumstances and advise on the best option for minimising your tax bill from owning second and rental properties.

 

The value of tax reliefs depends on your individual circumstances.

Tax laws can change.

The Financial Conduct Authority does not regulate tax advice and some buy to let mortgages.

For specialist tax advice please refer to an accountant or tax specialist.