Landlords – Tax Changes

Mortgage interest relief

As of 6 April 2020, landlords will no longer be able to claim any tax relief on mortgage interest and other financial costs which could result in a significant rise on personal tax bills. Landlords now will only receive a 20 per cent tax credit towards all financing costs.

Capital Gains Tax

Principal Private Residence (PPR) relief is a valuable relief which is designed to allow taxpayers to sell their main residence without having to pay Capital Gains Tax (CGT).

Lettings relief is available in conjunction with PPR which helps to decrease the amount of gain when the main residence is rented out. From 6 April 2020, the government have reduced the lettings relief for landlords who may rent out their main residence. Previously if a landlord rented out their main residence and thereafter decided to sell the property, a deduction of up to £40,000 could be claimed against any gains on the property for this rental period. However, this relief has now been amended and can only be claimed where the landlord has been living in the property with the tenant they are renting to.

Another change to the PPR relief is where property owners can now only claim tax relief for the last 9 months period after selling as opposed to 18 months after moving out as it was pre-April 2020.

Landlords are now also required to pay CGT sooner, as from April 2020 landlords are required to pay their tax bill within 30 days of the completion of sale.

Stamp Duty Land Tax

As of 8 July 2020, the chancellor announced a temporary holiday on stamp duty on the first £500,000 of all property sales in England and Northern Ireland. This threshold has been temporarily raised until 31st March 2021 to help boost the property market and assist buyers who would be struggling due to the coronavirus pandemic.

This significant change will save buyers up to £15,000 on properties up to the £500,000 threshold. The average stamp duty bill will fall by approximately £4,500, with the chancellor suggesting nearly nine out of ten people who are buying a main home this year will pay no stamp duty.

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