Buy-to-Let Tax Relief to Still Exceed £15bn Under New Rules
UK landlords are expected to claim £15 billion in buy-to-let property expenses, even under forthcoming Government changes to mortgage interest tax relief, according to new research from Ludlow Thompson estate agents.
When changes to tax relief are enforced in 2018-19, landlords will still be able to claim around £6.3 billion on interest payments made on loans used to purchase buy-to-let property, despite the reduction.
In the summer Budget, Chancellor George Osborne revealed that the Treasury expects total revenue to rise to £1 billion by 2020-21 after cutting the tax relief available to buy-to-let landlords.
Additionally, from April, the Government is changing the Wear and Tear Allowance so that investors will only be reimbursed for money actually spent on replacing furnishings and white goods, instead of being an automatic 10%.
Ludlow Thompson found that in the past year, tax relief on buy-to-let mortgage interest payments was the highest amount claimed, at £6.6 billion.
Chairman of Ludlow Thompson, Stephen Ludlow, says: “Even with the slight Government reductions to tax reliefs, buy-to-let still offers some of the most attractive tax breaks of all investments.
“There are still large incentives for potential investors, including significant tax reliefs for costs such as general maintenance as well as legal and professional fees.
“Averaged over the lifetime of a buy-to-let investment, recent tax relief and SDLT [Stamp Duty Land Tax] changes will have a very negligible impact on total returns to investors.”1
From April, buy-to-let investors and second home buyers will be charged an extra 3% in Stamp Duty on purchases over £40,000.
Do you think these changes will greatly affect your lettings business?
1 http://www.propertyreporter.co.uk/landlords/btl-tax-reliefs-to-exceed-ã¢15bn.html