Yesterday, George Osborne announced his summer 2015 budget.
Here are some key points affecting property owners: Mortgage interest tax relief for buy-to-let landlords to be cut from the top rate of 45% to 20% Thousands of buy-to-let landlords will see their earnings hit after George Osborne cracked down on mortgage interest tax relief in his summer Budget. The amount landlords can claim as relief will be set at the basic rate of tax – of 20%. Currently, landlords can claim tax relief on monthly interest repayments at the top level of tax they pay of 45%. This change will be phased in over a four-year period from April 2017.
According to the Chancellor buy-to-let investors unfairly preside over homebuyers with the ability to deduct costs from their profits before they pay tax and the new changes will ‘level the playing field for homebuyers and investors’. Family Home Allowance Introduced Currently, Inheritance Tax is charged at 40% on estates over the tax-free allowance of £325,000 per person. From April 2017, each individual will be offered a family home allowance so they can pass their home on to their children or grandchildren tax-free after their death. This will be phased in from 2017-18. The family home allowance will be added to the existing £325,000 Inheritance Tax threshold, meaning the total tax-free allowance for a surviving spouse or civil partner will be up to £1 million in 2020-21. The allowance will be gradually withdrawn for estates worth more than £2 million. Permanent non-dom status to end Non-domiciled individuals (non-doms) live in the UK but consider their permanent home to be elsewhere.
The current UK rules allow non-doms to pay UK tax on their offshore income only when they bring it into the UK. Permanent non-dom status will be abolished from April 2017. From that date, anyone who’s been resident in the UK for 15 of the past 20 years will be considered UK-domiciled for tax purposes. The reform does not eliminate the tax status, but individuals who have lived in the UK for 15 of the past 20 years will lose the right to claim it.
The government also announced that from April 2017, new rules would be introduced so that everyone who owns UK residential property and would otherwise pay inheritance tax on the property cannot avoid the tax by holding it in an offshore company.
If you have a mortgage enquiry that you would like to discuss, please call us for a free consultation on 0207 519 4900 or email us at firstname.lastname@example.org. The information contained is based on our understanding of current HMRC taxation rates, the levels, bases and reliefs from taxation are subject to the individual circumstances of the investor and may be subject to future change.