Over the past few years, there have been several changes to tax rules for residential landlords. This means that anyone investing in buy-to-let properties either for the first time or as they build their portfolio should take the time to understand the impact on their potential earnings from a rental property.

This blog outlines some of the key change that was introduced on 6 April 2017 following the Spring Budget. Now details, have been given about restrictions to interest relief for landlords.

Before the change landlords could deduct these finance costs from their property income. These costs included:

•    Mortgage interest

•    Interest on loans to by furnishings

•    Fees associated with repayment of loans or mortgages.

The restriction to interest relief for landlords will be phased in over the next few years; this will let landlords plan. This shows how the phasing will work:

•    2017/18 - 75% of finance costs will be allowed

•    2018/19 – 50% of the finance costs will be allowed

•    2019/20 – 25% of the finance costs will be allowed

•    2020/21 – The restrictions will be fully in place

The remaining finance costs for each year will be given as a basic rate tax reduction but cannot create a tax refund.

It is important to understand fully who these restrictions will apply to:

• UK resident landlords that let residential properties in the UK or overseas

• Non-UK resident landlords that let residential properties in the UK

• Landlords who let such properties in partnership

• Trustees or Beneficiaries of trusts liable for income tax on the property profits.

The following are not affected by these restrictions: The UK and non-UK resident companies or landlords of ‘Furnished Holiday Lettings’.

If you are a landlord and want some advice on how these restrictions will affect you, then please do get in touch with us and we can help. Contact us by calling 01623 490120 or email This email address is being protected from spambots. You need JavaScript enabled to view it..