Will I be a higher tax payer under the new tax rules?

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    Will I be a higher tax payer under the new tax rules?

    I am not fully understanding how the new tax rules will effect me when the are fully implemented.

    My rental income is £20k. This is after removing all expenses including interest payment. I pay £25k in interest on my 2x property's mortgage.

    Under the new tax rules. .......

    1. Will my income be £20K so I pay the same tax as before. So I get mortgage tax relief on the interest.


    2. Is my income now £20k + £25k = £45K which makes me a higher tax payer. I therefore pay the 40% tax and also don't get any tax relief on my interest. I therefore pay 40% tax on the full £45K.


    I don't know about anyone else, but it really looks like you've chucked a lot of words together and almost ended up with sentences and questions... but it's not making much sense to me. Have another go at framing this...


      The new rules, which don't come in till next year incidentally will mean that your income will be assessed as £45k, so you will pay a little tax at 40% but you will be able to add back 20% of the mortgage interest before calculating the final tax figure


        Neither of those options is correct.
        Your income will be £45k, but you will also be able to claim 20% of the interest cost against the tax you would pay.
        You only pay tax at the higher rate on the income over the higher rate threshold, which is currently about £42,600 for most people.

        This is being phased in over the next three years (the allowance is currently higher than 20% and moves down to that figure in increments).
        At the same time, it is possible that the higher rate threshold will increase - the chancellor has said it will increase to £50k in the life of this parliament.
        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).



          Thanks for that. I can now see the extra I will be paying will not be that much more.


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