Bad News for Landlords who are Higher Rate Tax Payers

calcFrom April 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

As limited companies are not affected by the tax relief changes, it may be financially beneficial for some landlords to consider creating a Special Purpose Vehicle Limited Company. Of course, it will depend on individual circumstances and landlords considering this option should contact us beforehand.