One of the key attractions of investing in property as opposed to other assets is that the interest on borrowings to buy property is tax-relievable against the income generated. At current interest rates and yields, this has encouraged landlords to borrow as much as possible, thereby increasing the size of their portfolio and/or reducing their tax bill. Mr Osborne has now sounded a death knell for this technique by announcing that over the four years from April 2017, for individual investors, he will phase in a reduction in the rate of tax relief on interest to basic rate. For higher and additional rate taxpayers this could significantly increase their tax bill on buy-to-let investments – currently interest often offsets a large part of the rental income.
The other change for buy-to-let – from 2016/17 onwards – will be the replacement of the 10% wear and tear allowance for furnished lettings with a new relief that allows the actual costs of replacing furnishings to be deducted. In practice this relief will be worth less than the current allowance and will mean that the landlord has to incur real pounds and pence expenditure to claim it.
If you have been considering buy-to-let, these changes mean you should review whether it is still the most appropriate form of investment, particularly when the other changes to savings taxation are taken into account.
If you need advice on this issue then call one of our advisers today on: 01273 882200.
All details above were correct at the time of publishing - for more up to date information please
get in touch
This is the first in our series of blogs designed to help you better understand your business accounts. We’re kicking things off with the profit & loss report!
Taking on your first employee can be an exciting time but there are some responsibilities you need to be aware of. One of them is compulsory pensions these are your auto-enrolment responsibilities. Find out what this means below.
This is the second most popular question from business owners. This sounds like a simple question but the answer is complex and involves many aspects to consider. The answers will depend on the make of the car, the tax position of the owner, their business and the method of ownership.
Dealing with overseas
customers and VAT rules can be a bit complicated for some businesses,
particularly those in retail where you may not have proof that goods are
leaving the UK.
Read below to find out more about the options available to your business.
If you receive rental income from a furnished residential letting then you’ll be aware of a “Wear and Tear” allowance, eligible for use against your properties. This allowance recently saw a change to its terms, read below for more details.