Tax is an increasingly important element of investing and letting property and there are four tax changes taking effect in 2018 that could affect landlords. While some will impact on your profits this tax year, some will have an effect into the future, so it’s important that you understand what the changes are and plan ahead to ensure your investment delivers the returns you expect and you don’t get any nasty surprises when your tax bills arrive.
Britain’s Buy-to-Let (BTL) investors have felt the sharp end of the UK Government’s need for more tax income over the past couple of years. And 2017 will host the next set of tax changes investors are facing – a reduction in mortgage tax relief.
The Council of Mortgage Lenders (CML) has downgraded its forecast for Buy-to-Let (BTL) lending after the sector has performed more weakly than anticipated in the first half of 2017. And, while the Bank of England (BOE) and general banking sector aren’t displaying any concerns over the slowdown as yet, that could change in the future.
As the Government’s latest tax change for landlords came into force on April 6th, a survey conducted for Experience Invest, suggests 85% of affected Britons are completely unaware of them and what their impact could be. The change is only the beginning of reducing the amount of tax relief landlords can claim. And, as of April 6th, landlords will only be able to claim tax relief on 20% of their mortgage interest payments – less than half the 45% they were able to claim prior to April 2017.
While there haven’t been any recent tax announcements that could affect landlords, there are some changes taking effect this tax year that you should be aware of.
As if landlords haven’t had enough tax changes to deal with over the last few years, now another potential tax hike is on its way. It won’t affect all landlords, but for those it does affect, the costs could be very high.