{"id":2604,"date":"2017-04-11T12:00:24","date_gmt":"2017-04-11T11:00:24","guid":{"rendered":"https:\/\/www.buyassociation.co.uk\/?p=2604"},"modified":"2017-04-11T12:00:24","modified_gmt":"2017-04-11T11:00:24","slug":"new-buy-let-tax-will-work","status":"publish","type":"post","link":"https:\/\/www.buyassociationgroup.com\/en-us\/2017\/04\/11\/new-buy-let-tax-will-work\/","title":{"rendered":"New buy-to-let tax and how it will work for you"},"content":{"rendered":"<p><strong>Last week saw the introduction of rather significant changes to the taxation of buy-to-let investments in the UK, leaving some landlords puzzled as to how it will affect them.<\/strong><\/p>\n<p>Since April 6, last Thursday, buy-to-let investors <a href=\"https:\/\/www.buyassociationgroup.com\/en-gb\/2017\/04\/03\/buy-let-tax-changes-investors-guide-changes-happening-april-2017\/\" target=\"\" rel=\"noopener\">became unable to offset all their mortgage interest against their profits<\/a>. Over the next three years, until 2020, landlords will become unable to deduct interest from their tax.<\/p>\n<blockquote class=\"wp-embedded-content\" data-secret=\"4KYJU4vsK5\"><p><a href=\"https:\/\/www.buyassociationgroup.com\/en-gb\/2016\/10\/25\/mortgage-tax-relief-changes-wont-stop-landlords\/\">Mortgage tax relief changes won\u2019t stop landlords<\/a><\/p><\/blockquote>\n<p><iframe class=\"wp-embedded-content\" sandbox=\"allow-scripts\" security=\"restricted\" style=\"position: absolute; clip: rect(1px, 1px, 1px, 1px);\" title=\"&#8220;Mortgage tax relief changes won\u2019t stop landlords&#8221; &#8212; BuyAssociation Group\" src=\"https:\/\/www.buyassociationgroup.com\/en-gb\/2016\/10\/25\/mortgage-tax-relief-changes-wont-stop-landlords\/embed\/#?secret=8VH1rzv2fj#?secret=4KYJU4vsK5\" data-secret=\"4KYJU4vsK5\" width=\"600\" height=\"338\" frameborder=\"0\" marginwidth=\"0\" marginheight=\"0\" scrolling=\"no\"><\/iframe><\/p>\n<p>These changes mean that, in the long-run, many landlords will have to pay more in tax. Or, even worse, will be taxed on profits that don\u2019t actually exist.<\/p>\n<p><strong>What does this mean?<\/strong><\/p>\n<p>Payers of higher tax rates will no longer be able to offset all their mortgage interest against <a href=\"https:\/\/www.buyassociationgroup.com\/en-gb\/2017\/03\/02\/uk-regional-rental-prices-north-west-leading-way-yield-demand\/\" target=\"\" rel=\"noopener\">rental income<\/a> before calculating the amount of tax they\u2019re due to pay.<\/p>\n<p>This reduction is being slowly introduced, in phases, between now and 2020 and will eventually be replaced by a 20% tax credit.<\/p>\n<p><strong>The phases are as follows:<\/strong><\/p>\n<ul>\n<li>2017: <strong>75%<\/strong> of mortgage interest against profits are deductible<\/li>\n<li>2018: <strong>50%<\/strong> of mortgage interest against profits are deductible<\/li>\n<li>2019: <strong>25%<\/strong> of mortgage interest against profits are deductible<\/li>\n<li>2020: <strong>0%<\/strong> of mortgage interest against profits are deductible<\/li>\n<\/ul>\n<p>The move will mainly affect those already paying income tax at a higher rate, it will also push some basic-rate payers into a higher bracket once their rental income has been added.<\/p>\n<p>The changes will only apply to those classified as <a href=\"https:\/\/www.buyassociationgroup.com\/en-gb\/2017\/04\/05\/continuing-rise-generation-rent-best-friend-private-rented-sector\/\" target=\"\" rel=\"noopener\">private individual landlords<\/a> and not those owning property through companies.<\/p>\n<p><strong>What should you do?<\/strong><\/p>\n<p>Landlords will have to do the numbers and be more focused on their costs, Alistair Hargreaves of mortgage broker John Charcol told The Telegraph.<\/p>\n<blockquote><p>\u201cLandlords need to plan and be prepared. If they are already a landlord and are putting off understanding the impact of the tax on them, they need to see their tax adviser and ask what the damage is.\u201d<\/p><\/blockquote>\n<blockquote class=\"wp-embedded-content\" data-secret=\"KQUhP4fRt3\"><p><a href=\"https:\/\/www.buyassociationgroup.com\/en-gb\/2017\/04\/06\/invest-hmo-property-infographic\/\">Why Invest in HMO Property? [Infographic]<\/a><\/p><\/blockquote>\n<p><iframe class=\"wp-embedded-content\" sandbox=\"allow-scripts\" security=\"restricted\" style=\"position: absolute; clip: rect(1px, 1px, 1px, 1px);\" title=\"&#8220;Why Invest in HMO Property? [Infographic]&#8221; &#8212; BuyAssociation Group\" src=\"https:\/\/www.buyassociationgroup.com\/en-gb\/2017\/04\/06\/invest-hmo-property-infographic\/embed\/#?secret=BrJ5jQrn30#?secret=KQUhP4fRt3\" data-secret=\"KQUhP4fRt3\" width=\"600\" height=\"338\" frameborder=\"0\" marginwidth=\"0\" marginheight=\"0\" scrolling=\"no\"><\/iframe><\/p>\n<p>And those who only own a smaller portfolio or who know the new tax effects won\u2019t hit them as hard will have to focus on costs. Options include changing to a lower mortgage rate or <a href=\"https:\/\/www.buyassociationgroup.com\/en-gb\/2017\/03\/06\/rental-price-growth-slows-landlords-reluctant-push\/\" target=\"\" rel=\"noopener\">raising rents<\/a>.<\/p>\n<p>If you are a landlord and uncertain how the new tax changes will affect you, you can calculate any changes to your profits using The Telegraph\u2019s buy-to-let calculator <a href=\"https:\/\/www.telegraph.co.uk\/investing\/buy-to-let\/new-buy-to-let-tax-works-andhow-beat\/\" target=\"_blank\" rel=\"noopener noreferrer\">here<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Last week saw the introduction of rather significant changes to the taxation of buy-to-let investments in the UK, leaving some landlords puzzled as to how it will affect them. Since April 6, last Thursday, buy-to-let investors became unable to offset all their mortgage interest against their profits. Over the next three years, until 2020, landlords<a class=\"excerpt-read-more\" href=\"https:\/\/www.buyassociationgroup.com\/en-us\/2017\/04\/11\/new-buy-let-tax-will-work\/\" title=\"ReadNew buy-to-let tax and how it will work for you\">&#8230; Read more &raquo;<\/a><\/p>\n","protected":false},"author":1069,"featured_media":4409,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[2,4,6],"tags":[22,29,176],"acf":[],"_links":{"self":[{"href":"https:\/\/www.buyassociationgroup.com\/en-us\/wp-json\/wp\/v2\/posts\/2604"}],"collection":[{"href":"https:\/\/www.buyassociationgroup.com\/en-us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.buyassociationgroup.com\/en-us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-us\/wp-json\/wp\/v2\/users\/1069"}],"replies":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-us\/wp-json\/wp\/v2\/comments?post=2604"}],"version-history":[{"count":0,"href":"https:\/\/www.buyassociationgroup.com\/en-us\/wp-json\/wp\/v2\/posts\/2604\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-us\/wp-json\/wp\/v2\/media\/4409"}],"wp:attachment":[{"href":"https:\/\/www.buyassociationgroup.com\/en-us\/wp-json\/wp\/v2\/media?parent=2604"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-us\/wp-json\/wp\/v2\/categories?post=2604"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-us\/wp-json\/wp\/v2\/tags?post=2604"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}