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Ask Your Own Question, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 7223
Experience:  FCCA - over 40 years experience as a qualified accountant (UK based Practitioner)
Type Your Tax Question Here... is online now

Previously I did not need to pay rental income tax as the

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Previously I did not need to pay rental income tax as the mortgage was deductible. I submitted a form to HMRC to show there was no profit and all was fine. I have just realised the law has changed, a mortgage is no longer deducted, the changes were staggered changes since 2017. If I submit a tax form for last FY will that be sufficient and continue to do this from now on?
JA: Which tax year is the deduction for?
Customer: last yeat
JA: Anything else you want the Accountant to know before I connect you?
Customer: no

Hello and welcome to JustAnswer. I am here to help you. I am reviewing your question and will respond to you shortly.
Many thanks

Thank you for your question.

You should prepare your rental income statements for all years since the change to mortgge interest relief and see overall impact on tax.

Mortgage interest as allowable expense against rental income after change was

Tax year 2017-18 75% as expense and 25% available as basic rate deduction

Tax year 2018-19 50% as expense and 50% available as basic rate deduction

Tax year 2019-20 25% as expense and 75% available as basic rate deduction

Tax year 2020-21 100% available as basic rate deduction

If you are a basic rate taxpayer then the change has no impact on your tax payable on rental income.

My aim is to give you a professional service. I hope this is helpful and answers your question.

Please remember to rate my service before you leave JA today. If you need more assistance, please use the reply box below and let me know. It has been my pleasure to assist you with your question. and other Tax Specialists are ready to help you

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I'm glad I could help you resolve this today. Please follow up here if you have any other questions.

Best wishes.

Customer: replied 5 days ago.
Thanks for your answer. In 2018 I bought a residential property with the plan to change to buy to let in this year, are the purchase cost (legal, mortgage fees etc) tax deductable since the purchase is part of a buy-to-
let business plan?

Thank you for your reply.

This is not related to original question and should be put as a fresh question per Just Answer protocol. On this occasion, I will answer it here.

Costs associated with purchase would be deducted from gain when you eventually sell the property. Mortgage fees would not be deductible against rental income unless at the time of purchase it was bought for letting purpose.

I hope this is helpful.