With the 2017 spring budget announced there were some key changes made to ‘landlords and property’ which will of course impact those of you who are landlords and own property (funnily enough! haha). In case you missed the budget or just want to know the key facts I have listed the main 4 changes made to the budget for landlords and property owners and how these changes will effect you.
Offsetting Mortgage Interest
Automatic offsetting of mortgage interest will no longer be allowed, instead you will get a basic rate charge of 20%. However this isn’t going to be an immediate change, the government are planning to phase this out over the next four years which will work like this:
2017 = 75% claimable
2018 = 50% claimable
2019 = 25% claimable
2020 = 0% claimable – completely phased out
Wear & Tear
You were able to write off 10% of your rental income for wear and tear however with immediate effect this is no longer the case and you will simply claim the actual expenditure cost for replacing furniture or goods etc.
Stamp Duty Land Tax
These rates have changed quite considerably for landlords (please see new rates below) and you will now immediately pay 3% for Stamp Duty Land Tax:
up to £125,000 = 3%
£125,001 – £250,000 = 5%
£250,001 – £925,000 = 8%
£925,001 – £1.5m = 13%
over £1.5m = 15%
Rent a Room Relief
The Rent a Room Scheme is specifically aimed at people letting out furnished accommodation within their home. The changes in the budget now allow you to earn up to £7,500 per year tax-free on this scheme (which works approx out as an additional £144 per week!) which is a nice reasonable rise in tax relief for anyone on this scheme.