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All change for landlords

7th August 2017

 

All change for landlords

 

From 6 April 2016, the 10% Wear and Tear Allowance for furnished letting income has been scrapped and instead all landlords of residential property can now deduct the expense of replacing furnishings. This means that the replacement of items, such as carpets and curtains, in unfurnished, partially furnished and furnished property can now claim 100% tax relief. The initial expenditure does not, however, receive income tax relief. So when you’re collecting together all of your invoices for the 2016/17 tax year, please point out to your accountant where an item is replacing a like-for-like asset.

 

Going forward there continue to be changes to tax allowable expenditure. From 6 April 2017, H M Revenue and Customs will begin to phase in the loss of higher rate tax relief on loan interest incurred as a result of acquiring a buy-to-let property. For landlords, the main expenses are often mortgage interest and agency fees, and therefore this change is likely to have a significant impact on higher rate and additional rate landlords. Basic rate taxpayers need to also be aware of the changes because the new calculation will inflate their total taxable income, which could result in them exceeding the basic rate threshold and thus being charged tax at higher rates. There may also be an impact on their tax credits.

 

 

If you would like to discuss the changes in further detail, please contact Zoe Lewis or any member of our team.