Restricting Tax Relief on Finance Costs for Landlords
Currently, landlords can deduct finance costs such as mortgage interest from their rental income before calculating their tax liability. But this relief is being gradually slashed from the current 100% to zero, over the course of four years (April 2017 – April 2020).
before the tax relief reaches zero, landlords will be able to obtain relief in the following percentages:
In 2017 to 2018 the deduction from property income (as is currently allowed) will be restricted to 75% of finance costs, with the remaining 25% being available as a basic rate tax reduction
In 2018 to 2019, 50% finance costs deduction and 50% given as a basic rate tax reduction
In 2019 to 2020, 25% finance costs deduction and 75% given as a basic rate tax reduction
From 2020 to 2021 all financing costs incurred by a landlord will be given as a basic rate tax reduction.