In 2015 George Osbourne announced the phased reduction of tax relief on buy-to-let mortgage interest.
Prior to April 6th 2017 landlords were able to write off 100% of mortgage payments as tax deductions from their rental income. However, since April 6th 2017 landlords have seen the amount they can write off for tax purposes drop by 25%. It will continue to drop a further 25% every tax year until 2020 when landlords will have to declare all their rent as income, pay income tax on the total and then claim 20% back as a credit.
Landlords will have less tax relief and could see their incomes rise for the purposes of declaring income to the tax man.
To see how this is currently affecting you, and how it will affect you in the future we’ve created a handy calculator so that you can estimate your profits and returns.
Simply enter in your monthly rental income and costs, along with your annual salary (to calculate your tax bracket), and it’ll do all the hard work for you.
You can also download an excel version of our calculator here.