BTL landlords will still claim £16.7bn in relief despite tax changes

Buy-to-let landlords will still benefit from £16.7bn worth of tax relief, based on claims from the latest year’s tax returns, even after the government’s changes to the system are fully implemented by 2020.

The tax reliefs enables landlords to offset against their rental income expenses such as mortgage interest and other financial costs; property repairs, maintenance and renewals; legal, management and professional fees; and rates, insurance and ground rents. According to the Treasury, the amount of taxes it collects from landlords look set to increase by £840m a year by 2020-21 after its cuts in tax reliefs on interest payments and property maintenance.

David Vieira, Go Commercial Finance Managing Director said: “Despite tightening, buy-to-let tax breaks are still very valuable, highlighting that rental property remains a highly attractive investment vehicle. Those tax breaks are essential to ensure that landlords continue to invest in maintaining their properties. If the tax breaks are reduced further then landlords will cut their investment in the properties they own – reducing the standard of UK rental accommodation.”

Landlords claimed more than £7bn in tax relief on mortgage interest and other financial costs, while £3.7bn was claimed for property repairs and maintenance. After planned changes to tax relief are fully implemented, landlords will still be able to claim approximately £6.4 billion on interest rate costs alone. Vieira added: “Labour mobility continues to be central to economic strength. However, if cities like London are to remain a magnet for home-grown and international talent, sustaining a vibrant, high quality rental market is essential. To do that, the system has to work well for both tenants and landlords.”