What's changing?

From 6th April 2017 - April 2020, HMRC are progressively changing landlords’ abilities to deduct their finance costs in full so that they will only be able to deduct 20% of the cost from their personal tax liability.

Whilst higher and additional rate tax payers will be impacted by the changes, it also potentially impacts basic rate tax payers as well.

Landlord Tax:

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- Landlords with residential properties (excluding FHLs)

- Individuals, but not companies

- Applicants who transact with an Ltd or LLP

Those particularly impacted by the changes are:

- Existing higher rate tax payers (40% & 45%)

- Landlords with marginal rental cover (high mortgage costs relative to rental income)

- Tax payers moving into higher rate tax band as a result of the changes

- Landlords with strong rental cover

How can Taylorcocks help?

Landlords may be able to operate their property businesses through a limited company in order to benefit from tax and succession planning. It may also be possible, via the use of a company trust structure, to incorporate the property business without the need for re-financing.

Assuming all the criteria are met, landlords may be able to operate their property business via a company, with no detrimental tax implications upon incorporation and with the following benefits going forward:

To discuss the possibility of incorporating your property portfolio, please contact us for a free consultation.

1. Preservation of Finance Cost Relief in the company

2. Tax on profits under Corporation Tax regime

3. Flexibility in taking profits out personally, or growing cash reserves for capital investment

4. Greater range of succession planning options

5. An uplift in the base cost of the properties

Who is affected?

Contact a property tax expert at Taylorcocks today: