The Budget – Tax Relief for Landlords
From April 2016, there are changes to the tax relief that landlords can apply for as part of their buy-to-let business.
Some concerns have been raised about the effect on the UK financial stability as a result of the growing buy-to-let economy. The Government has therefore decided to restrict the level of relief that landlords can obtain in line with basic rate of income tax, which will be phased in starting from April 2017.
Currently, buy-to-let landlord can deduct their costs from profits before they pay tax in line with their own levels of tax. From April 2016, landlords will now only be able to recover the actual cost of replacing furnishings instead of the ability to deduct 10% of their rent from their profits to account for wear and tear.
The Government is, however, increasing the amount of tax relief to those individuals who rent out a room in their main residence from £4250 to £7,500 a year.