Do you know about the tax changes introduced in the summer budget on Buy to Let investments?
Whilst they won’t have an impact until 2017/18, they are significant enough to make many investors reconsider the viability of Buy to Let as an income strategy.
Currently an investor is allowed to offset several expenses incurred against income received, as a result of owning the property. The obvious expense is the interest on any associated mortgage borrowing, although there are many other financial costs and allowances which investors are allowed to claim to reduce the tax owed on their investment.
Whilst HMRC are likely to issue further guidance as the deadline approaches, the main goal over the next three years is to introduce changes that limit the tax relief offered to a level in line with the basic rate tax, i.e. just 20%.
This loss in valuable tax relief could render many Buy to Let properties no longer a viable investment, and with the potential of capital gains tax liabilities when disposing of the property it is important to plan ahead before the tax rules start to take effect.
It is worth taking the opportunity to consider your position carefully and assess the current returns you are receiving in conjunction with robust tax advice.
As always Platinum are happy to help any clients and encourage those concerned to get in touch.