You are here: Home - Mortgages - Buy To Let - News -

Landlords face 60-day tax change countdown

0
Written by: Tim Chen
30/11/2017
Landlords have 60 days left to file their 2017 tax returns – the first to detail the impact of new rules potentially meaning higher taxes.

According to research from Simple Landlords Insurance, which surveyed 760 UK landlords between July and September, almost half of landlords have changed their investment plans based on the tax changes.

The research also showed that 18% of landlords ranked changes to tax relief as having the biggest influence on their investment strategy – representing a bigger concern than changes to capital gains tax and increased stamp duty.

Nevertheless, less than 10% of landlords intended to reduce the size of their portfolios.

In fact, 4.4% of those owning at least two properties actually intend to invest further, and 63% of this cohort said the tax changes had had no effect on their plans.

The National Landlords Association estimates that the initial loss in tax relief this year could push more than 440,000 lower-rate taxpayers into a higher tax bracket. In England, the association estimates that 8.2 million people will be affected.

The phased reduction of tax relief on mortgage payments began in April this year with the deductible reduced from 100% to 75% of mortgage interest payments against rental income.

In April 2018, relief will be further reduced to 50%, then to 25% in 2019 before being removed entirely in 2020. The relief will be replaced by a tax credit of 20%.

A challenging year

The BTL market has seen a raft of changes as of late, including a stamp duty surcharge introduced on second and successive homes, as well as more stringent lending requirements from the Prudential Regulation Authority (PRA).

In the new year, landlords will also face proposed new requirements for HMO licensing, as well as energy performance rules which will come into effect for new lets and renewals on 1 April 2018.

See YourMoney.com’s Six points buy-to-let landlords need to know going into 2018 for more information.

Head of operations at Simple, Alex Huntley, 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 more than one in three landlords 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.”

Huntley added: “There is no one solution or route, and landlords need to get expert advice tailored to their individual circumstances. But it’s heartening to see the majority of landlords remaining undeterred, and thinking about how to change with the market.”

The deadline for tax assessment and payment is 31 January 2018.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Flight cancelled or delayed? Your rights explained

With no sign of the problems in UK aviation easing over the peak summer period, many will worry whether holida...

Rail strikes: Your travel and refund rights

Thousands of railway workers will strike across three days this week, grinding much of the transport system to...

How your monthly bills could rise as the base rate reaches 1.25%

The Bank of England has raised the base rate to 1.25% as predicted – the fifth consecutive rise in just six ...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week