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Dave Bloke

Tax relief on mortgate interest.

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5 hours ago, Dave Bloke said:

Tax relief on mortgage interest is only 50% this year, I think this is the first time this has been applied. Anyone know what effect this is having on the UK market?


You mean btl?

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1 minute ago, Dave Bloke said:

yeah but it is all connected innit? I'd have thought BTLers were getting reamed by this

They are.

Most dont kniw this as tgey dont fill in a tax return. Or grasp the hew tax policy.

Its not really new, its an overlooked area.

ToS is good.

Nailed the outcome 4 years ago.

Idiot btler have only grasped it now.




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2 hours ago, spygirl said:

They are.

Most dont kniw this as tgey dont fill in a tax return. Or grasp the hew tax policy.


In this regard the new policy has a nuance that hasn't really been talked of much -- all that's spoken of is that the tax relief goes from a max of 40% to 20%. 

But there is an important change in the wording -- the 'reduction' used to be calculated by using mortgage interest to reduce the profit, which was then taxed.  For the new policy the profit is calculated first, and then the impact of mortgage interest is worked out as a tax reduction.

Why is this important?  Well, you only need to fill in a tax return if you make enough money (after costs, including deducting mortgage) -- and HMRC doesn't know if people with more than one property have made enough money so don't know  if they should be filling in a tax return.  Of course, they could guess and do a check, but that's not quite as easy as it sounds.  But in the new system you need to fill it in if you make sufficient profit before deducting mortgage interest (which then might reduce the tax bill).  So HMRC can 'know' that anyone with additional property pretty much must be making enough money to fill in a tax return -- so the 'burden of proof' to go to checking/auditing the individual will be much lower.

I think this'll catch quite a few people out.

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