You may or not be aware that as of 1 April 2016 the stamp duty land tax (SDLT) on second homes and buy to let purchases will be increased by 3%. If that wasn’t enough for landlords, the government has also announced that as of April 2017 the tax relief claimed by landlords on their financial costs will be capped at 20%, instead of the higher rate of 45%, which will be phased out over the following years.
Chancellor George Osborne also added that the current ‘wear and tear’ allowance afforded to those letting out furnished property would be scrapped and replaced with relief against the cost of replacing furnishings. With so many changes all within a small time frame, it has created a complicated scenario for many landlords, who may be seeking the financial guidance of an adviser to ensure they make the right decisions.
In an effort to curb incentives for housing investment, the government has introduced the changes to “level the playing field” between landlords and first-time buyers. This has caused some controversy within the industry as some feel the changes are unfairly targeting landlords when the housing crisis is also affected by many other factors.
Some landlords are even considering incorporation and setting up a limited company to apply for their mortgages, to ensure their portfolio remains as tax efficient as possible. But this is a complicated area and these changes will affect each landlord differently. That is why talking to us and your accountant, will help prepare you for and deal with the changes.
The Financial Conduct Authority does not regulate Tax planning and some forms of Buy To Let mortgages.
Did you know we also have Mortgage Advisers in Bournemouth