Tax relief changes for landlords

Tax information is based on our understanding of the proposed tax legislation as at 29 April 2016, and may be subject to change.

No information on this site should be taken as tax advice. For advice your clients should consult with an independent tax adviser.

At present, landlords can deduct mortgage interest and other allowable costs from their rental income, before calculating their tax liability.

From April 2020, tax relief for finance costs will be restricted to the basic rate of income tax, currently 20%. Relief will be given as a reduction in tax liability instead of a reduction to taxable rental income. This means taxable income will be derived from rental income (less allowable costs, not including mortgage costs) instead of gross profit.

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The changes will be phased in from April 2017, as the table below shows.