The Association of Residential Letting Agents is reminding members of tax changes ahead - a timely intervention with the deadline for self-assessment tax returns from landlords being January 31.
The association is reminding members and clients that landlords have previously been able to claim 100 per cent Mortgage Interest Relief (MIR) for rental properties, but this year that has been reduced to just 75 per cent with the remaining quarter of mortgage interest qualifying for 20 per cent tax credit.
The phased reduction, over four years, will see MIR disappear completely by the end of 2020, with the entirety of mortgage interest instead qualifying for 20 per cent tax credit.
“We have argued before and will continue to argue that thousands of landlords will pay more tax under the changes introduced in April 2017 under Section 24 of the Finance Act 2015” says ARLA in a statement released at the end of last week.
“If your landlords clients are in a higher tax bracket, they won't get all the tax back on their mortgage repayments, as the credit only refunds tax at the basic 20 per cent rate, rather than the top rate of tax paid.
“The change will also push many landlords with buy-to-let mortgages up a tax band, despite their income not increasing, as tax will be applied to turnover instead of profit.”
It warns that in a bid to cover these additional costs, landlords may increase rents or cut back on maintenance, damaging the quality of the rental stock overall.
“We want to see this overturned and full Mortgage Interest Relief returned” says ARLA.
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Yes it’s hit the Landlord again, amazing this conservative government.
“The change will also push many landlords with buy-to-let mortgages up a tax band, despite their income not increasing, as tax will be applied to turnover instead of profit.”
This is the worst thing about the legislation and very unfair.
why the conservative are not pushing on the local authority to do better instead of hitting the private sector for money. the LA are making millions with their penalties. so use that instead of fleecing capitalism in uk. no wonder most of us are too lazy to work hard or save money. its not worth it. its more beneficial to go on benefits than to be prudent.
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