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Tax Rules for Buy-to-Let Landlords

In the 2015 Summer Budget and Autumn Statement, the Chancellor introduced several changes that will affect anyone buying or owning a buy-to-let property in the UK. It is important that landlords understand these changes because they may affect the profitability of many buy-to-let portfolios, however small or large they are.

From 1 April 2016, higher rates of Stamp Duty Land Tax (SDLT) (3% above the current rates) will be charged on the purchase of additional UK residential properties. This may impact buy to let investors.

For example, a property bought now for £500,000 would attract tiered SDLT rates of 0% on the first £125,000, 2% on the next £125,000 and 5% on the remaining £250,000, or £15,000 in total. But after 1 April, the rates will be 3%, 5% and 8% respectively, or £30,000, if the purchaser already owns one or more residential properties.

Also, from 2017 the amount that some landlords can claim in tax relief on their finance costs (such as mortgage interest payments, interest on loans to buy furnishings and fees incurred on taking out and repaying mortgages) is being gradually reduced over 4 years.

When the new restrictions are fully in force from the beginning of the 2020/21 tax year, landlords will be only be able to claim tax relief at the basic tax rate of 20%, instead of 40% or 45% for those in higher or top rate income tax brackets respectively.

If you would like to find out more about how these changes will affect you just give us a call on
020 7 275 7177 or send us an email: hackney@bennettwalden.co.uk.

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22/03/2016 by Bennett Walden
Category: News
Tags: buy-to-let, landlords, tax rules, new tax rules
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