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HMRC Target Buy to Let Landlords

The number of buy to let landlords has increased in recent years and inevitably this has attracted the attention of HMRC. George Osborne has announced a number of changes that will increase the tax paid by landlords.

From April 2016 there will be a 3% surcharge on stamp duty land tax payable by anyone buying second or subsequent properties. This increase in costs may deter some prospective buy to let landlords.

There will also be a restriction on the ability to offset mortgage interest. By 2020 landlords will only be able to offset mortgage interest at the basic rate of income tax. This is being introduced gradually from April 2017 so landlords need to consider how this affects their tax position.

Higher rate tax payers will pay more tax as the relief for finance costs will be restricted to the 20% rate. Even basic rate taxpayers may be affected as the interest charge will be excluded when calculating the taxable income, so anyone near the basic rate tax limit may find that they will exceed the limit and have some of their income taxed at the higher rate.

There are also going to be changes to the reporting and payment dates of capital gains tax (CGT) on the sale of residential properties. CGT is currently reported on the annual tax return but as part of the change from personal to digital tax accounts from April 2019 the capital gain will have to be declared and paid within 30 days of the property sale.

Landlords should therefore take advice about their future plans.

Howell & Co has been assisting Online Profiling Ltd since 2005. They couple efficient service with good practical advice and are always extremely helpful and professional.  
Trevor DawesManaging DirectorOnline Profiling Ltd

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