Landlords have just two months left to prepare for tax changes

 

With the 31 January 2018 tax assessment deadline looming, landlords have 60 days to get to grips with the latest regulatory changes.

In April this year, Section 24 of the Finance Act, which will roll out over the next four years, began to take effect. The new rule means landlords will no longer be able to offset the cost of mortgage interest payments against their rental income before they pay tax.

The tax relief was lowered from 100% to 75% in April, and will be reduced to 50% in April 2018, 25% in 2019, then 0% the following year, when landlords will no longer be able to take mortgage interest payments into account as an expense.

The January self-assessment tax return deadline will see the first effects of the relief reduction for landlords.

This year has seen a raft of changes for buy-to-let landlords, from stricter regulations to new lending requirements.

And next year will be no easier, as HMO licensing and new energy performance certificate requirements come into play.

Changing tack

The Section 24 amendments apply to UK resident landlords with residential rental properties anywhere in the world, non-UK resident landlords with UK-based residential rental properties, and trusts and partnerships with residential rental properties.

Landlords with the highest loan-to-values will of course be hit the hardest by the changes – those with buy-to-let mortgages in the 40-45% tax brackets will pay more tax, and landlords in the 20% bracket might pay more if their total gross income is more than £45,000.

Almost half (47%) of landlords surveyed by Simple said they had changed their investment plans because of the tax changes, although less than 10% will reduce the size of their portfolios.

A quarter of landlords put the tax relief changes as the biggest influence when planning their investment strategy.

Alex Huntley, head of operations at Simple, said: “We know that landlords are adapting to the changes in the market, and are willing to embrace the challenges and find opportunities to develop more profitable and sustainable portfolios.

“Our research found that over one in three landlords (38%) owning at least two properties would consider forming a limited company, trust, limited liability partnership or a combination of these to lessen the impact of the tax reforms.”

Highgrove Mews

High Net Yield Freehold Houses

  • Commutable to London (27 mins to central Paddington station)
  • Rental demand extremely strong with large industry presence in Reading
  • Freehold with 4% net yield

£284,955 - £457,000

St Petersgate – Stockport Manchester

New Launch - Stockport Manchester, apartments from £160,000

  • Discounted launch prices from £160,000
  • Excellent transport links with 3 trains per hour to London Euston and only 9 mins journey to Manchester Piccadilly
  • Experienced development team

Assured Rent Housing Association Leases

Assured Rent Housing Association Leases

  • Assured rent & no rental voids
  • Tenant damage cover & newly refurbished inline with requirements of a corporate sitting tenant
  • Free property and lettings management

From £62,000

Emerging Birmingham Commuter Town With Properties From Just £104,000

The emerging Birmingham commuter town where properties are selling in an average of just 24 days

  • A collection of 62 two bedroom apartments and 28 one bedroom apartments.
  • DE14 is one of the fastest selling postcodes in the West Midlands.
  • 23 minute train journey into Birmingham New Street Station.

Properties from £104,000

Mill, Stockport

The Northwest's emerging property hotspot

  • Discounted off-plan 2-bed prices from £162,000
  • Completion date - Q4 2021
  • Rental yields - 6% plus

Discounted off-plan 2-bed prices from £162,000

South Central – Birmingham City Centre Apartments

Highly anticipated 28 storey launch in Birmingham City Centre with an impressive roof garden and communal facilities.

  • 154 units across 28 storeys
  • Residential multi-media community room, gym, roof garden and sky cinema
  • Excellent future connectivity via the metro system to other key transport hubs and locations around the city

from £205,800

ba-

Talk to us

Speak to our UK property experts today: 

+44 (0) 333 123 0320

Open from 9am-6pm GMT

+852 9865 4446

Open from 9am-6pm HKT

Stamp Duty Calculator

.

Unlock members only investment opportunities and full development details. Join now – it’s free, quick and easy.

Login

Not a member? Sign up for free

Tax

Landlords have just two months left to prepare for tax changes

Example

By submitting your details via this online form you agree to be contacted via email/phone/SMS by Direct Marketplace Ltd t/a BuyAssociation in relation to property investment and property developments . We do not share your personal details with third parties.  To view our full Privacy Policy click here.