The buy-to-let market has been impacted by tax rule changes in recent years, and as a result landlords have been unable to deduct their mortgage expenses from taxable rental income from April 2020, receiving a tax credit based on 20% of their mortgage interest payments instead.
In addition, the 3% stamp duty surcharge on second homes was introduced in April 2016, hitting the pockets of many buy-to-let landlords.
These changes have had a major impact on the buy-to-let sector, which is why Kent Reliance for Intermediaries has teamed up with EY to produce a guide for property investors on the changes to the UK tax system.
The guide, entitled ‘Changes to UK Tax Relief on Finance Costs’, has been put together to provide information for intermediary partners on the key considerations faced by BTL landlords and how they run their rental portfolios.
The guide also outlines each tax that landlords need to be aware of prior to purchasing, transferring into a company structure or selling an investment property.
Adrian Moloney, group sales director at OneSavings Bank, said: “Our broker partners have told us that even though Covid-19 has impacted the purchase or remortgage activity of their clients, professional landlords are not standing idle. Many are taking advantage of the current situation to re-evaluate their investments, in order to maximise opportunities when normality returns.
“The latest edition of our 'Changes to UK Tax Relief on Finance Costs' for buy-to-let owners, informs our broker partners of the key considerations facing their clients regarding the tax changes.
“It is our hope that this guide will be a source of information for landlords and brokers about their portfolios but of course, this shouldn’t be seen as a substitute for professional advice.
“We always recommend to our broker partners that they advise clients to seek advice from an accountant or tax adviser to ensure they are fully aware of their portfolio’s tax liability.”
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