Summer Budget 2015 – Property

The Budget announcement included a number of measures which will be of interest to landlords of residential properties and individuals who let rooms in their own home (under the rent a room scheme).

The first measure is in relation to a proposed restriction in the level of relief available to landlords for finance costs (such as buy to let mortgage interest) if the landlord is liable to tax at higher rates. The intention is to restrict the relief to the basic rate of income tax so that landlords with higher incomes no longer receive more generous tax relief. The restriction will be phased in over the 2017/18 – 2020/21 tax years so that landlords have time to adjust to the changes.

Individuals who rent out a room in their own home can currently receive £4,250 free of tax per annum. This limit is being increased to £7,500 per year with effect from 6 April 2016.

The government also intends to replace the Wear and Tear Allowance (which is currently available to landlords of furnished properties) with a new relief that allows all residential landlords to deduct the actual costs of replacing furnishings. This change is also intended to take effect from April 2016 but is subject to a technical consultation which will be published shortly.

If you would like more information on this subject, or anything else covered in the Summer Budget 2015, please contact a member of the Tax Team in your local office – or email us at action@wrightvigar.co.uk – we would be delighted to help you.