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.
The government has announced plans to make buying or selling a home cheaper and quicker with what is being called the “biggest shake-up to the homebuying system in this country’s history.”
7 days ago
Almost one in five equity release mortgages are now taken out to provide financial support to family.
9 days ago
According to industry data, the expected wait for those looking to buy a property has dropped from just over 11 months to less than six months.
It is common for your first mortgage payment to be higher than your subsequent monthly payments for two reasons.
14 days ago
Firstly, a big congratulations, you’ve now exchanged contracts! After weeks and months of waiting, you are about to move in. What should you do first?
The chancellor will deliver her second budget this autumn. Due to slow economic growth and high inflation, the government need to manage a £40 billion shortfall in public finances. There have already been reports about changes to taxes including income tax and capital gains tax.
29 Aug 2025
The chancellor has advised that landlords could have another tax to pay this autumn as the Treasury decide whether to extend national insurance contributions to rental income.
According to a report in the Guardian, senior ministers have asked Treasury officials to look into a “proportional” property tax to see how it would work as an alternative to the existing stamp duty land tax on owner-occupied homes.