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

Landlords face 60-day tax change countdown

Written by: Tim Chen
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’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.

The savings accounts paying the most interest

If one of your jobs this month is to get your finances in order, moving your savings to a higher paying deal i...

Coronavirus and your finances: what help can you get?

News and updates on everything to do with coronavirus and your personal finances.

Everything you need to know about being furloughed

If you’ve been ‘furloughed’ by your company, here’s what it means…

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.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

Read previous post:
help to buy isa
Help to Buy ISA transfer to Lifetime ISA: act sooner rather than later

Help to Buy ISA savers looking to transfer their money to the Lifetime ISA are urged to make the switch...