The situation
A landlord with two buy to let properties, and a higher rate job alongside, had been preparing his own rental figures. He was still deducting mortgage interest from his rental profit as he always had.
The problem
Mortgage interest is no longer a straight deduction. Instead landlords get a 20% tax credit on finance costs, which increases the tax for higher rate landlords. His returns were wrong, and he was also missing allowable costs and unaware of the 60 day rule for a future sale.
What we did
- Corrected the finance cost treatment. We applied the 20% credit properly and reviewed prior years.
- Claimed every allowable cost. Letting fees, insurance, repairs and safety checks were all brought in.
- Set expectations for a sale. We explained the 60 day capital gains rule so a future disposal would not catch him out.
What changed
His returns were put right and made robust, missed expenses reduced the bill, and he now understands exactly how his rental tax works. When he later sold one property, the 60 day return was filed comfortably on time.
What this shows
The finance cost rules changed how landlord tax works, and higher rate landlords in particular are often caught out. Getting the treatment right, and claiming every cost, matters.
Letting property and unsure of the tax?
We handle your rental accounts, apply the finance cost rules correctly, claim every expense, and keep you ahead of the capital gains deadlines.