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Changes to Mortgage Interest Relief

Tuesday, 2nd August, 2016

HMRC

Changes to Mortgage Interest Relief, will be introduced gradually from 6th April 2017.

Currently BTL property owners are only liable to pay tax on their profits.  Under the new rules, mortgage payments will no longer be offset against rental income and therefore will become tax liable.  This will be phased in over the next four years.  The impact of the changes is summarised below:

Tax Year

2016/2017 
100% mortgage interest relief relieved against rental income.

2017/2018
Mortgage interest relief from property income restricted to 75% of finance costs, with the remaining 25% given as a basic rate tax reduction.

2018/2019
Mortgage interest relief from property income restricted to 50% finance costs, given a basic rate tax reduction.

2019/2020
Mortgage interest relief from property income restricted to 25% finance costs and 75% given as a basic rate tax reduction.

2020 onwards
100% mortgage interest relief, relieved at a basic rate tax only.





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