Landlord Tax - 2017

[MAPTON]

Reading through the posts, I can't see a clear answer on how mortgage interest is going to be viewed by the government. I,e, is it still regarded as a business expense or not?

The last few posts I've read seem to be along the lines of the mortgage interest won't be seen as a business expense anymore. To the regular posters on this forum, is this correct?


If so, for example:

Previous rental profit £15k, so tax at 20% = £3000.00

Rental profit, plus mortgage interest = £35k, so new tax as of 2017 would equal = £7000


Grateful for clarification if it does exist yet.

Many thanks
MAPTON

[King_Maker]

Yes, that is correct - loan interest will no longer be a busiiness expense for a property rental business (individual landlord).

The interest deduction will be given in terms of Basic Rate Tax.

[jpkeates]

added the word relief!

Previous rental profit £15k, so tax at 20% = £3000.00

Rental profit, plus mortgage interest = £35k, so new tax as of 2017 would equal = £7000

If you have interest payments of £20k you would deduct 20% of the interest from the tax due as the restricted tax relief due - £4k
So your tax would be unchanged in that example at £3,000

Obviously if that knocks you over into higher rate tax band you would pay more tax.

[MAPTON]

jpkeates,

I don't understand that. Currently, if my mortgage interest PA is £20k, if I am no longer allowed to offset the £20K, then surely my tax bill in respect of the mortgage interest is a further £4k per year?

[jpkeates]

The mortgage relief is restricted to the base rate of tax, not removed altogether.