If you are the landlord of a residential property then it may pay to start reviewing your tax arrangements before the taxman reviews them for you. Phased in over four years from April 2017, the tax relief that landlords can obtain in respect of finance costs will be restricted to the basic rate of income tax. This is on top of a reform in the wear and tear allowance which came into effect in the current tax year.
As a landlord you’re probably already aware of the forthcoming changes which were announced in the 2015 budget but you may have deferred taking action as April ‘17 was some way off. With the deadline getting ever closer, HMRC have now issued guidance in respect of the changes and in doing so have highlighted the fact that individuals, partnerships and trustee landlords will be affected differently from company landlords and those who offer furnished holiday lettings.
The changes could have a significant effect on an individual’s tax liability. The early that the effects of these changes are considered, the greater the chance of putting into place an effective tax mitigation strategy. If you would like to speak to a tax adviser about efficient tax planning, please contact Newshams Tax Advisers on 0203 151 0650 or email us at firstname.lastname@example.org.