Tax

On the 6th of April 2017, the government changed the way landlords are taxed in the UK.

The changes will:

• affect you if you let residential properties as an individual or in a partnership or trust
• change how you receive relief for interest and other finance costs
• be gradually introduced over 4 years from April 2017

Finance costs won’t be taken into account to work out taxable property profits. Instead, once the Income Tax on property profits and any other income sources has been assessed, your income tax liability will be reduced by a basic rate ‘tax reduction’. For most landlords, this’ll be the basic rate value of the finance costs.

Who will the changes affect?

• These changes will only affect landlords in the list below who have a mortgage for their rental property.
• Any UK resident individual who lets residential property in the UK or overseas
• Any non-UK resident individual that lets a residential property in the UK
• An individual who lets residential property in partnership with others
• Trustees of a trust directly holding UK residential property

NOTE: These tax changes will not apply to landlords of furnished holiday lets and commercial properties.

For more information visit:

https://www.gov.uk/government/news/changes-to-tax-relief-for-residential-landlords