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Changes to Landlord Tax Relief - Budget 2015
The Chancellor announced in the newly elected Government's first Summer Budget (July 2015) that Mortgage Interest Relief for residential landlords would be restricted to the basic rate of income tax (20%).
How does this affect me as a Landlord?
Mortgage Interest Relief
Under the current rules the full amount of finance costs paid by Landlords are allowed as deduction against rental income.
The new rules will be introduced gradually over a three year period starting from 6 April 2017, and relief will be available as follows:
- In 2017/18, the deduction from property income will be restricted to 75% of the finance costs incurred, with the remaining 25% being available as a basic rate reduction.
- In 2018/19, 50% of the finance costs will be given as deduction and the remaining 50% will be given as a basic rate reduction.
- In 2019/20, 25% of the finance costs will be given as deduction and the remaining 75% will be given as a basic rate reduction.
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Interest rate predictions – The Greek Effect
The market predicts the first rise in the UK Bank Rate around May or June 2016 with the consensus of economist views pointing to March. The market has shifted a little since the end of May when trading suggested the first increase would come in August or even September. Since then the UK has swung back out of its brief spell in deflation (-0.1pc CPI back to +0.1pc).
Also, the monetary policy committee has been voting unanimously to keep rates on hold but last week Martin Weale, a committee member, suggested he may soon break ranks and call for a rise.
But Paul Hollingsworth of Captial Economics said: "Even if one or two members vote to raise rates, we doubt that this will be a sign that the tide is turning.
With Greece’s No vote the pressure to hold rates may remain.
"Indeed, with concerns about Greece likely to linger, inflation to remain low by past standards and plenty of spare capacity left in the economy, we think that the MPC can hold off from raising interest rates until Q2 (April-June) next year."
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Goodbye to the Woolwich
Barclays has confirmed that, 15-years after buying the former building society, the Woolwich brand is being dropped.
A spokesman for Barclays said the end of the brand “will be a very gradual process” with mortgage holders still receiving paper documents with the Woolwich name appearing, although the websites will now feature the Barclays name.
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