From April 2017, the amount of tax relief that landlords of residential properties can claim for finance costs will be restricted to the basic-rate of Income Tax. Click here for an example of buy-to-let tax changes.
Currently, landlords can claim up to 45% tax relief however, this amount will be reduced and capped at 20%. The change will come into play this April and will be phased in over a four-year period.
“There is no doubt that many landlords are feeling unjustly targeted by the raft of new legislation and tax changes that are heading their way. Professional landlords, who treat their property portfolio as a business, have already started adapting to try and minimise the negative impact of new changes – mounting legal challenges against Section 24 and incorporating to avoid tax relief cuts. However, “accidental” or DIY landlords are in a very different position and are far, far less likely to adopt the same types of strategies.