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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15977
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I am a private landlord. I want to know if the changes to

Customer Question

I am a private landlord. I want to know if the changes to mortgage interest tax relief will affect me. My income comes solely from landlord profits and I have no other taxable income. I pay basic rate tax.
At present, I deduct 100% mortgage interest along with other expenses and allowances from rents. This results in profits less than the higher rate threshold.
Will the new changes also affect me?
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
Hi. The new rules don't start until 2017/18 and will gradually affect higher rate taxpayers over four years until the system is settled. The plan is not to allow interest to be given as a deduction from your rental income. Instead you will be given a basic rate tax credit equal to 20% of the allowable interest. The fact that you won't deduct the interest from your rental income directly means that your taxable profit will be higher than otherwise but if you are still within the basic rate tax band, it won't make any difference to you. Take a look here for some examples. I hope this helps but let me know if you have any further questions.
Expert:  TonyTax replied 2 years ago.
Hi again.
It's been a few days since I answered your question. Is there anything you need further clarification on?
Customer: replied 2 years ago.

Hi Tony, is this proposed change yet to become law? If not, what process has to occur in order that it is made law?

Expert:  TonyTax replied 2 years ago.
The Finance Bill 2015/16 is still going through the Houses of Parliament. The next committee meeting is on 13 October 2015. It should be enacted before the end of the year. You can follow its progess here.