Drummond Laurie Chartered AccountantsIn the 2015 Summer budget, the chancellor announced that, from April 2017, residential landlords will be restricted on the amount of mortgage interest they can claim as an expense.  This will be phased in from 2017/18 to 2020/21, at which point the individual will only be allowed an income tax deduction at the basic rate (20%) on the interest paid.

buy to letThis could significantly affect higher rate and additional rate taxpayers with residential property lets, although details of how the new rules work are limited at this stage.  If there are a number of properties held by higher rate taxpayers, the best option may be to use a limited company in order to facilitate the rentals, as this allows the mortgage interest to be deducted from rental income in full but professional assistance should be sought before utilising this option.

It is important to note that this only applies to residential properties that do not qualify as furnished holiday lets.

Should you have any queries on this, please contact David Anderson on 01324 441260.