Changes to Landlords Taxation
17th Jan 2018
Are you a landlord with residential properties in the UK?
We've put together a guide to some of the key tax changes affecting landlords which will help you manage the properties you own and make sure you meet the guidelines set by HMRC. If you have any queries about your properties, we are here to help, contact us on 0151 321 2340.
Unfortunately the legislation regarding Buy-to-let lending has also changed. New rules now state that lenders must consider the viability of a Landlord's entire portfolio when asked for finance rather than just looking at each property individually.
Letting Agent fees for Tenants
Back in 2016, the government pledged to remove Letting Agent fees for tenants. Whilst still a draft bill at the moment, this is likely to come into effect in 2018 with tenants no longer able to be billed for tenancy agreements, referencing and credit checks.
£1,000 Property Allowance
Landlords can claim up to £1,000 a year in tax-free allowances for property income from 6th April 2017. If your property is jointly with other people, each of you is able to claim £1,000 against the rental income.
Capital Gains Tax
Capital Gains Tax on any profit from the sale of a property that isn't your own home will now be charged at 18% is now charged on residential property and 28% on any amounts above the basic rate band.
Restrictions to tax relief on mortgage interest
Through a four-year reduction of the offset of mortgage interest, higher rate taxpayer landlords will see their relief reduced to the basic rate. For the 2017/18 tax year, Landlords will only be able to apply the existing relief rules to 75% of their finance costs and the remaining 25% will be subject to the basic rate. During the following three years there will be a 25% reduction each year before the basic rate applies in full from 2020/21.
Stamp Duty surcharge on additional properties
Since April 2016, the purchase of a second property has been subject to a 3% Stamp Duty surcharge.
Mileage for Landlords
In the Autumn Budget last year, the Chancellor announced that Landlords would have a choice when calculating their motoring expenses. Landlords have the flexibility to either use mileage rates or continue to deduct actual running costs and claiming capital allowances.
For more information or help managing your portfolio contact Gareth at GRC Accountants on 0151 321 2340 or click here to email us.