Aug 12

Understanding the Tax Changes for Landlords 2016

Understanding the Tax Changes for Landlords

The Buy to Let market has taken a little bit of a hit lately with the changes to the way the tax is calculated. Not much has changed in many ways (or so it seems) but the way the sum is calculated has – and the results are having a big impact on Buy to Let Landlords.


Understanding the Tax Changes for Landlords 2016

Read the Sage & Co Guide to Understanding the Tax Changes for Landlords 2016:

In a nutshell, the new way of calculating tax is based on profit excluding loan interest rather than profit as we know it, meaning that tax will possibly be payable on nonexistent income. Landlords will no longer be able to deduct the cost of their mortgage interest from their rental income when they calculate their profits on which they pay tax. In other words, tax will be applied to the net rent received (income less direct expenses) rather than what is left of the rent after the mortgage interest has been paid.

When George Osborne announced the change in the 2015 Budget, he implied that the extra tax would hit only higher-earning landlords. It’s true that every mortgaged landlord who pays 40 percent tax will indeed pay much more under his proposals. But some basic-rate taxpayers will also pay more tax because of the way tax relief is given, which will push them into the higher rate bracket. This will also affect anyone who claims Tax Credits and possibly those that claim Child Benefit.


Understanding the Tax Changes for Landlords 2016

The team at Sage & Co Chartered Accountants specialise in Accountancy Services for Landlords and have put together a simple infographic to explain these changes and how they can affect you. These changes are being rolled out slowly over the next coming years with full implications being reached by 2021.

Understanding the Tax Changes for Landlords 2016

We believe that forewarned is forearmed. By presenting the facts, we hope to provide you with informed choices on how best to manage your wealth. If you’d like to chat through your own personal circumstances in more detail, please do not hesitate to make a no obligation, FREE appointment with a specialist member of our team 01745 586360.

 

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