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Since April 2017, the system of calculating tax bills on rental income has changed, and by April 2020, landlords will not be able to deduct all their mortgage expenses from their rental income. Instead, landlords will be given a new tax credit, which is less generous than the current regime.
The Government is phasing in the new mortgage interest rules over a four year period. From Friday 6 April the 2018-19 tax year changes are as outlined below:
• In the 2017-18 tax year, landlords could claim 75% of their mortgage tax relief
• In the 2018-19 tax year, landlords can claim 50% of their mortgage tax relief
• In the 2019-20 tax year, landlords will be able to claim 25% of their mortgage tax relief
Landlord buy to let mortgage tax relief in April 2020
From April 2020, landlords will no longer be able to deduct their mortgage costs from their rental income.
All of the rental income earned will be taxable, and landlords will instead receive a 20% tax credit for their mortgage interest.
For further details please see the government website.
Please note: This news post should not be used advice, we cannot advise on this as we are not specialists and the tax implications will depend on your particular circumstances. Rental income is taxable. We advise you to get professional tax advice from a tax specialist.