BTL tax reliefs to exceed £15bn despite government cuts

After planned changes to tax reliefs become effective in 2018-19, landlords will still be able to claim approximately £6.3 billion on interest rate payments made on loans used to purchase buy-to-let property despite the amendments to how those reliefs work.
 
In the Summer Budget, the Treasury announced that it expects total revenue to rise to £1 billion by 2020-21 after reducing the tax reliefs available to buy-to-let investors on interest payments and property maintenance. From April 2016, the Government will change the wear and tear allowance to the direct cost of replacing furnishings and white goods, instead of being 10% of rental bills.

Ludlow Thompson notes that in the last year, tax relief on interest rate payments for buy-to-let property were the highest amount claimed at £6.6 billion.

Stephen Ludlow, Chairman at Ludlow Thompson, commented:

“Even with the slight Government reductions to tax reliefs, buy-to-let still offers some of the most attractive tax breaks of all investments.
 
“There are still large incentives for potential investors, including significant tax reliefs for costs such as general maintenance as well as legal and professional fees.

"Averaged over the lifetime of a buy to let investment recent tax relief and SDLT changes will have a very negligible impact on total returns to investors."