Tax
By Bea Patel, TLE Property Editor and Director of Shop for an Agent – the estate agent comparison site.
More than four hundred-thousand landlords who pay the basic rate of tax will be forced into a higher tax bracket from April 2017, as planned changes to landlord taxation come in to force.
The news comes as the National Landlord Association (NLA) met with Housing and Planning Minister, Gavin Barwell.
Landlords can currently deduct mortgage interest payments, letting agent fees, insurance premiums and maintenance and property repair costs as business costs.
But once the phased changes are fully in effect by 2021, landlords won’t be able to deduct mortgage interest payments or any other finance-related costs from their turnover before declaring their taxable income.
The amount by which landlords will be affected will depend on their personal circumstances, including if they generate additional income elsewhere.
Tax liability will increase depending on existing annual mortgage interest payments, which are broken down by portfolio size (NLA Quarterly Landlord Panel):
Although 440,000 basic-rate tax payers will be forced into a higher bracket, all landlords could be at risk of seeing their tax liability increase, regardless of their existing rate of tax. Across the country, 31 per cent of landlords in Central London, 30 per cent in the East of England and 28 per cent in West Midlands will be particularly hit.
