Tax changes for buy to let landlords
HMRC have announced changes to the taxation of rental income from domestic properties wth the abolition of the Wear and Tear allowance and a restriction on the interest deductible by tax payers.
From 6 April 2016 the Wear and Tear Allowance claimable by landlords for furnished lettings is no longer deductible against property income. relief can be claimed for the actual cost of renewing furniture/carpets etc. Therefore if you have plans to replace items in the next 4 months it may be worthwhile delaying the expenditure until after 5 April 2016.
From April 2017 HMRC will start to withdraw full tax relief for interest paid by tax payers. From April 2020 relief will only be available at the basic rate currently 20%.
If you want further information or to discuss the implications and possible ways of mitigating against them please contact us.