Tax changes for landlords
By Richard Morrell, Oct 17 2015 10:15AM
Rent a room relief
From April 2016 the annual relief will increase from £4,250 to £7,500. About time too, it feels like it has been £4,250 for an enternity!
Wear & tear allowance
Subject to consultation, from April 2016 the allowance may be abolished and replaced with a new system that allows landlords to claim relief only when they replace furnishings.
Mortgage interest relief
From April 2017 mortgage interest relief will start to be restricted to just the basic rate and given as a tax reduction, not an allowable expense. This will be phased in from 2017 to 2020. In other words, if you are a higher rate taxpayer you will pay more tax!
Possible strategies for landlords that will be affected by the changes...
Change mortgage to one with a lower interest rate (interest rates are expected to rise soon!)
Possibly assign some of the rental profits to you spouse (if you have one and they are not working!)
Put the property into a company (subject to conditions)
Raise the rent (make the tenant pay!)