Section 24, the finance cost restriction for private landlords, has now been live for 15 months with landlords starting to see the impact as tax returns and accounts are processed for the 2017/18 tax year.
From April 2018 mortgage interest relief has been restricted to 50% of the loan payments value - an increase of 25% of the previous year.
HMRC introduced Section 24 to the tax regime back in April 2017 where an initial reduction of 25% was placed on the amount of borrowing that could be offset for tax purposes. Year on year this decrease is set to increase by 25% meaning that by 2021 tax relief for mortgage interest for private landlords is going to be limited to a 20% tax credit. On an average sized portfolio with mortgages worth £1m this is going to see an increase in costs to landlords of around £10,000 per year. And this is based on today’s interest rates, if rates go up then so will the cost to the landlord.
HMRC have exempted this charge from landlords where the property is held in a limited company. Within the company, the mortgage interest is seen as an allowable business expense and thus exempt from a tax charge.
Please contact us on in[email protected] if you are affected by the introduction of these changes.
From April 2018 mortgage interest relief has been restricted to 50% of the loan payments value - an increase of 25% of the previous year.
HMRC introduced Section 24 to the tax regime back in April 2017 where an initial reduction of 25% was placed on the amount of borrowing that could be offset for tax purposes. Year on year this decrease is set to increase by 25% meaning that by 2021 tax relief for mortgage interest for private landlords is going to be limited to a 20% tax credit. On an average sized portfolio with mortgages worth £1m this is going to see an increase in costs to landlords of around £10,000 per year. And this is based on today’s interest rates, if rates go up then so will the cost to the landlord.
HMRC have exempted this charge from landlords where the property is held in a limited company. Within the company, the mortgage interest is seen as an allowable business expense and thus exempt from a tax charge.
Please contact us on in[email protected] if you are affected by the introduction of these changes.
