Karen Press, property tax specialist at Smith & Williamson, the accountancy, investment management and tax group, highlights the recent big tax changes for landlords and how it might affect them in the future.
The changes include;
The restriction on the tax relief available for financing costs has been the real talking point. Currently, residential landlords are able to obtain income tax relief on financing costs at their marginal rate, whether that be 20%, 40% or 45%.
However, from April 2017, residential landlords will start to have a restriction applied to the relief they receive on these finance costs. The restriction will completely disallow any finance costs from the tax calculation and introduce a basic rate tax credit, equal to 20% of the associated finance costs.
This restriction will be phased in from 6 April 2017, and will be fully implemented from 6 April 2020. Due to the specific interactions involved, some individuals will see their tax bill increase by more than the difference between their marginal tax rate and the 20% tax credit.
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing. The tax treatment depends on the individual circumstances of each client and may be subject to change in future.
Smith & Williamson LLP
Regulated by the Institute of Chartered Accountants in England and Wales for a range of investment business activities. A member of Nexia International.
If you’d like to hear more on the proposed changes to tax regulation and law from Karen you can join us for our Landlords of the Future Roundtable discussion.
Your chance to ask our panel of experts on what the future of being a landlord looks like in 2016 and beyond.
Thursday 26th May, 6.30pm.
Andrews is delighted to host our property sessions roundtable in partnership with tax specialist Karen Press from Smith & Williamson, alongside a panel of our experienced property experts. We are inviting you to watch what promises to be a lively debate, industry insight and also have the exclusive opportunity to pose your questions to our panel. Our property expert’s panel are well known in the world of property and happy to share their views, thoughts and ideas on the impact of the forth-coming EU referendum, changes in the tax, the best buy to let mortgages and their current on the property market.
This hour long session is suitable for both experienced landlords looking at maximising their portfolio and people thinking of buying their first rental property.
The event will be streamed online live from Keynsham near Bath.
Find out more here