Changes Buy to Let Owners Need to Know About

Changes Buy to Let Owners Need to Know About

From the 1st April 2016 and during 2017, there are some new changes coming into effect which will impact people buying Buy to Let properties. The new rules cover stamp duty, mortgage relief, wear and tear costs and safety rules. Here the changes are explained, so you know how they will affect you. If you need to speak to accountant with regard to these changes, have a chat with SQK Accountancy in Manchester, they help individuals and small businesses.

Stamp Duty Land Tax from April 2016

At the moment the amount of stamp duty land tax you pay is not effected by the number of properties you own and it stands at 5%. However, from the 1st April 2016, if you own one or more properties you will pay an increased rate of 8% – A rise of 3%.

For example, if you already own a home and you buy another for the sum of £400,000 you will pay stamp duty land tax at 8%. Currently you will pay £20,000, but from the 1st April it will jump up to £32,000.

Tax Relief on your Mortgage Interest Payments from 2017 to 2020/21

Currently, you pay tax on the difference between your annual mortgage interest and the income you make from the property. For example, at the moment if you own a buy to let property and you make £12,000 in profit and from this you pay £9,000 interest. You only pay tax on the difference of £3,000. That means:

Basic rate tax payers at:   20% would pay £600

40% would pay £1200

45% would pay £1350

From 2017 the way the rate will be calculated will change to you owing your personal tax rate on the entire amount of the income you produce and 20% of the full interest you are paying. Therefore:

Basic rate tax payers at: 20% would pay £600

40% would pay £3000

45% would pay £3600

As you can see basic rate taxpayers at 20% won’t be paying anymore, but for those who pay 40% and 45% tax there is a considerable increase.

Wear and Tear Changes from April 2016

At present landlords have an allowance for the replacement or the repair of furnishings in their properties, whether they used or not. From April you will have to provide the receipts from the replacement purchases or the repairs carried out. If receipts aren’t provided you won’t get the appropriate relief.




The rules at the moment state that landlords must provide an Energy Performance Certificate and a Gas Safety Certificate for any gas appliances in the property. In the future there will be laws in place with regard to the prevention of Legionnaires disease, plus rules about fitting smoke and carbon monoxide alarms.

If you require any help or advice with regard to any changes in tax, or about VAT then get in touch with SQK Accountancy in Manchester. They provide an affordable, friendly service and are happy to help with any accountancy queries.

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