Reminders for landlords

Making Tax Digital

Until a recent announcement, landlords were going to be drawn into the requirement to upload quarterly details about their property businesses to HMRC under the Making Tax Digital obligations.

The date that did apply was April 2018 or April 2019 depending on the level of your rental income. We are now told that the only MTD filings required before April 2020 are VAT returns (from April 2019). As property rents are a predominantly exempt supply for VAT purposes property businesses can take a deep breath, at least until April 2020.

From April 2020, only businesses with turnover (rents in the case of landlords) more than the VAT registration threshold will be required to make quarterly uploads. Landlords with smaller rental receipts will no longer be required to concern themselves with MTD, although they could do so on a voluntary basis.

Tax relief on interest payments

For income tax purposes, 2017-18 is the first year that part of your finance charges will be disallowed and replaced with a basic rate tax credit – 25% will be converted in this way. If your interest charges are £20,000 during 2017-18, you will be able to claim £15,000 as a deduction from your profits, the balance of £5,000 will create a basic rate tax credit that you can deduct from your tax bill.

Further 25% slices will be changed in this way during 2018-19 and 2019-20 such that by April 2020 none of your finance charges will qualify for tax relief, and instead, will be replaced with a basic rate tax credit.

This will negatively impact the tax liability of higher rate tax payers, and certain highly geared landlords with significant interest charges.

Take advice

If you have not yet spoken to us about either of these matters please call and let’s consider your options.

Latest Blog
07
Dec

Planning for higher corporation tax rates

We are fifteen months away from a radical upward lift in corporation tax (CT) rates. ...

Read More
02
Dec

Tax Diary December 2021/January 2022

1 December 2021 – Due date for corporation tax payable for the year ended 28 Fe...

Read More
02
Dec

Budget bad news 27 October 2021

Readers should take note of the following changes: Income Tax Allowances frozen: The ...

Read More
02
Dec

Budget bonuses 27 October 2021

There was little good cheer in the Chancellor’s announcements to parliament on ...

Read More

CONTACT SIMON COOPER