2020 Brings changes for Landlords
Landlords have had to contend with a layering of changes in fiscal and regulatory policy targeting the buy-to-let market since 2015.
They used to deduct all finance costs from their rental income and profits were taxed at their marginal rate. However, starting from April 2017 and phased in over a four-year period, tax relief for finance costs are being restricted to a basic rate tax credit. The phased reduction began with claimable tax relief reduced to 75% and continued through 2019 to 2020.
In the 2020 to 2021 tax year, landlords won’t be able to claim any tax relief on mortgage interest payments. Instead, from April 2020, they will receive a 20% tax credit on interest payments. In response, landlords are adopting a range of different strategies to mitigate the impact of these changes, ranging from rent increases to portfolio resizing.