It’s been a while since (the then) Chancellor George Osborn announced changes to the way Buy to Let properties are taxed, and although he is long gone, his legacy is about to come to fruition.
Anyone who pays high rate tax and receives rental income from a second home, will find the historic tax advantages currently available being phased out by 2020.
Under current rules, private landlords are entitled to claim tax relief back on mortgage interest at the rate they pay income tax – 20% for a basic rate taxpayer and up to 45% cent for a top rate tax payer.
For example, a landlord with an interest-only buy to let mortgage paying £1,000 a month can claim up to £450 of it back from the government in tax relief. Under the new rules this will reduce to just £200 by 2020.
The solution for some seems to be to set up a limited company within which to purchase the buy to lets. This enables the landlord to claim the costs of running the ‘buy-to-let business’ as they would any other 'allowable expense', effectively writing off the cost of mortgage payments, wear and tear, maintenance, letting agents' fees and other costs.
If you want to withdraw money from the company (i.e. the rent), you can pay yourself a dividend, which is taxable at the normal rate you pay tax on.
Owning any limited company means you pay corporation tax on any profit, but the good news is that the corporation tax rate of 20% is due to fall to 18 % by 2020.
If you already own property and you are tempted to transfer it to a limited company, Stamp Duty is payable on the value of the property and there could also be a capital gains tax bill. I would suggest speaking to an Accountant before deciding if it’s the right thing for your particular circumstances.
More and more lenders are allowing Limited Company buy to let’s and although the rates are little higher than other Buy to Let rates, they remain competitive.
Related Blog articles:
- How much Deposit do you need for a Buy to Let Mortgage?
- Why do people Buy to Let?
- What is a Buy to Let Mortgage?
For more information speak to a mortgage adviser on 01628 507477 or contact us .
Recent posts
Here are the lowest fixed mortgage rates of the week, available to first-time buyers, home movers, buy-to-let, and those remortgaging.
Call us for more information: 01628 507477 or email: team@mortgagerequired.com.
Different seasons can have a noticeable effect on property prices.
Research from Zoopla shows that spending out on certain features can fetch up to £29,000 during the summer months.
Monday 22nd June saw Keir Starmer resign as Prime Minister and Labour leader. The resignation does not directly impact mortgage rates, as changes were taking place before this announcement. However, it could influence mortgage rates indirectly through financial markets and future government policies.
Homebuying reform to cut homebuying times by around four weeks, and save first-time buyers around £650, says the government.
Buying your first home is a huge milestone, but it can also be a complex process. There are several factors a first-time buyer should consider before making an offer on a property, including understanding the difference between leasehold and freehold and checking council tax bands.
We’ve detailed some questions you can ask your estate agent to help you make an informed decision.
Signs it's time to remortgage
15 days ago
Remortgaging means switching to a new mortgage deal. This will either be with your current lender or a new one.
Getting advice and moving to a new deal when the time is right can mean lower monthly mortgage payments, better interest rates, or releasing equity from your property.
Here are some signs it may be time to remortgage.
According to Nationwide Building Society’s latest House Price Index, house prices dropped 0.6% month on month in May – the first monthly decline this year.
Most Affordable UK Spots for First-Time Buyers
19 May 2026
Research from Lloyds identifies the most affordable areas in the UK for first-time buyers to be able to get onto the property ladder.
More information
Trusted by
