In2017 the government introduced new laws aimed at reducing the tax relief enjoyed by landlords of private buy-to-let properties. The law removed tax relief on loan interest (at the time a landlord was able to set 100% of the annual interest against income) through a phased programme.

April 2020 brings with it the end of this phasing. Landlords no longer enjoy tax relief on interest and instead will be faced with a flat tax credit of 20% for mortgage interest. But it doesn’t end there.

Along with this well-publicised change, there are other changes. Landlords that incur a capital gain liability will now have just 30 days to pay the tax due. In the past such gains were normally included in annual tax returns, making payment a less immediate liability.

In addition, landlords that had previously lived in a property at some point prior to letting it, could exclude gains for that period of occupation when calculating CGT liability and also exclude the last 18 months of gains before the sale. This 18 month period has now been reduced to just 9 months.

The rules around letting relief have also been changed. The previous CGT relief of £40,000 (or £80,000 by joint owning couples) on capital gains realised on the sale of a second residence that was previously their primary residence, is now only applicable if they are living in the property at the time of sale.

Of course, to incur a CGT tax liability, one must first make a capital gain and the good news is that this year the individual annual CGT allowance is £12,800 before tax becomes payable.

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