Interest expense on tax return - how to obtain?

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    #16
    Originally posted by leasee123 View Post
    Thanks so much jpkeates for clearing that up. Just so I completely understand - say I left the property instead one day prior to the start of the let - i.e. 31st May, would I report the interest paid on the mortgage on 15th May or does it instead start from 15th June? I am pretty sure it is the former but just want to double check.

    Thanks for the above post #11 also; will keep that in mind when filling in the return. As a 20% taxpayer overall it would not make a difference to the amount of tax I will pay but good to know how to do fill it out properly.
    jpkeates - just wanted to clarify the above?

    thanks

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      #17
      So I have received the "certificate of loan interest paid" from my lender. It just appears to state the amount of interest I paid for the 19/20 tax year with no breakdown by month.

      The current let is the first and only let I have had which started on 1st June 2019. I had previously lived at the property until I moved out on 30th April. My mortgage payments are taken on the 15th of every month (interest + capital). What interest do I need to include in the self assessment?

      Do I:

      a) put the interest paid for the whole year as stated in the certificate
      b) put the whole interest as a) minus the interest paid for the month of April
      c) something else?

      I have no other statements apart from a annual mortgage statement for calender year 2019 which lists all the payments made for the year but no breakdown between interest and capital repayment.

      Thanks

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        #18
        The amount of interest that you pay reduces slightly each month, as the mortgage is repaid (ever so slowly!), so if you just apportion the interest over the period after 30th April you'll be slightly overstating the interest (although the difference is probably minuscule.

        I'd probably say use 11/12ths of the interest for the tax calculation - but I am extremely cautious with this kind of thing (and its not my money!)
        When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
        Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

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          #19
          Thanks jpkeates, will use 11/12ths interest as it should be conservative as you mention.

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            #20
            I agree with 11/12ths interest figure for finance costs because the tax year starts on 6 April. .

            If you are completing a SA200 -2020 ( short tax return form) :

            ( a) box 6.2 is for "expenses allowable for tax" . You can include the property maintenance expenses plus 25% of the loan interest

            (b) box 6.6 is for "finance costs not included in box 6.2" , you enter 75% of loan interest.

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              #21
              Thanks Gordon999 - that is very helpful to know.

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