What effect is George Osborne’s Proposed Buy-to-Let taxation change going to have?
It is being proposed that Tax relief for the UK's buy-to-let landlords will be cut from April 2017, meaning landlords will no longer be able to claim tax reliefs on their buy-to-let mortgage payments. Instead, over a four-year period, 25% each year will be reduced on the maximum tax relief ultimately leading to 0% tax relief on interest payments by 2021. In a nutshell, this means a landlord will be taxed on the gross income rather than the net income irrespective of whether a profit is generated. Such action will result in many landlords being financially unable to hold the ownership of those properties and a supply of properties will hit the market.
From April 2016, landlords will also lose the right to automatically claim 10% of the rent against wear-and-tear costs and will only be able to deduct the costs that they actually incur.
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