In 2015, the then Chancellor George Osborne announced major plans to restrict tax breaks for residential buy-to-let landlords which could see half of their profits wiped out.
Gradually phased in over 4 years from April 2017, the change means mortgage interest relief along with arrangement, booking and valuation fees will be restricted to the basic rate of tax of 20%. Relief will be given as a reduction in tax liability instead of a reduction to taxable rental income.
Prior to 2017, landlords were able to offset all of their mortgage interest charges against their rental income.
In 2017-18, the tax relief claimable reduced to 75%, and in 2018-19, 50%. For 2019-20, it is currently only 25%.
From 6 April 2020, tax relief will be restricted to the basic rate of income tax, currently 20%. Relief will be given as a reduction in tax liability instead of a reduction to taxable rental income.
Prior to 2017
2017-18
2018-19
2019-20
April 2020
100%
75%
50%
25%
0%
0%
25%
50%
75%
100%
Tax Partner
Tax Manager
