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Residential landlords are continuing to feel the impact of new legislation.
Interest relief restrictions for individual landlords of residential property are still being phased in, reducing the deductibility of finance costs, such as mortgage interest, interest on loans to buy furnishings, or fees incurred taking out or repaying loans or mortgages. Only a proportion is now allowed. For the 2018/19 tax year, the proportion drops to 50%, with 50% given as a basic rate deduction. Further reductions are to come. The restrictions have significant impact on the way landlords are taxed, and may push basic rate taxpayers over the threshold at which they become higher rate taxpayers.
Budget 2018 also brought changes to the capital gains tax (CGT) regime which take effect from April 2020 and may impact someone renting out, and then disposing of, what used to be a main home. Historically, the final 18 months of ownership of a property has attracted a valuable CGT exemption. This will be reduced to nine months. Also from April 2020, CGT lettings relief is no longer available unless the owner shares occupancy with a tenant. We look at this further in 'Tax when you sell your home'.
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HMRC has published a policy paper outlining the forthcoming changes to the penalties for late payment and interest harmonisation for taxpayers.
HMRC has published a consultation that outlines plans to implement reporting rules for digital platforms first put forward by the Organisation for Economic Co-operation and Development (OECD).
The CIOT has warned that some claims being made by firms offering help with Stamp Duty Land Tax (SDLT) refunds are too good to be true.