The 2017/18 tax return season is now well underway and we are beginning to see the impact of the interest restriction for interest paid on buy to let mortgages.
By way of a reminder, with effect from 6 April 2017, the tax relief available to buy to let investors on the interest & finance costs they pay on their buy to let mortgages is being restricted to the basic rate of income tax.
The restriction will be phased in over four years, the cost restricted to basic rate each year is as follows: 2017/18 25%, 2018/19 50%, 2019/20 75% and 2020/21 100%
The way tax relief for interest is given is also being changed. Your tax liability is initially calculated without any relief for interest costs at all. The tax relief is then given as a reduction in the tax liability, compounding the impact of the change and will push more people into the higher tax rates.
It may be possible to plan around the changes, for more information, please contact Lesley Sutton on 01484 550037 or email firstname.lastname@example.org