All things Tax New Buy to Let Tax Rules for Landlords in 2019
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All things Tax – New ‘buy – to – let tax rules for landlords in 2019’


Tax and accounting structures and rules are subject to revise periodically. If you are a landlord, the way you have declared rental income has changed since April 2017. It indicates that the tax rule changes on rental income will see a significant rise on tax bills.

It was normal to borrow money through a buy-to-let mortgage for tax benefit. However, time’s changed. This piece of writing explains what changes are shaping, how they are being implemented, and how much landlords have to pay.

Stay tuned.

Our ‘new buy-to-let tax rules’ guide will allow you to understand the new changes in the most comprehensible way.

Previously, landlords could counterbalance the mortgage interest payment against their rental income. But the government announced in 2015 that they’re phasing it out.

In 2017-18, it came to an effect. You could now claim the tax relief of 75% unlike 100% before. In 2019-20 it’s only 25 per cent. The shocker is – It will be gone completely next year.

This has been replaced with a 20 % tax credit by the government. As a result, it isn’t significantly beneficial for higher-rate and additional-rate taxpayers. In 2019-20, you could apply for the credit on 75% of your mortgage interest.

The changes to mortgage interest tax relief only affect private and individual landlords. To lessen the impacts of new rules, the majority of landlords are opening a limited company while investing in a new rental property. The advantage of this is they’ll be subject to 19% of Corporation Tax rates, which are lower than individual income tax rates.

Let’s learn about the mortgage tax relief for a property with an example.

2) What about buy-to-let Income Tax?

Here, the government has raised the personal allowance to £12,500 a year early. You could earn this amount before you start paying the income tax. The higher rate start point too, increases from £46,000 to £50,000. It’s that point where you start paying the higher-rate income tax, which is 40% on your profit. The additional-rate income tax brink remains unchanged at £150,000

3) What are the Capital Gains Tax rates?

There’s a change at this segment too. The government has also increased the Capital Gains Tax allowance for 2019-20. It rises from £11,700 to £12,000.

Let’s understand it with an example. If you are selling a second property, you get to earn it more tax-free. However, the Capital Gains Tax rate is comparatively higher for landlords. It’s 18% for basic tax-payers and 28% for higher and additional tax-payers.

4) Are there any changes to ‘Private Residence Relief’ rules?

Yes! The government announced some changes to Private Residence Relief rules for 2020 in autumn budget 2018. As of now, if you lived in your property before letting it to tenants, you get Private Residence Relief when you decide to sell it.

In such a scenario, you are exempted from paying any Capital Gains Tax for the time you stayed in the house, plus an additional 18 months after you vacated the property. However, concerning the new rules, this period has been deducted to 9 months.

Furthermore, you are only entitled to claim the letting relief of £40,000 if you are a landlord who shares occupancy with their tenants.

If you are planning it sell it, it is advisable to rethink your options. Speaking with an expert is always beneficial. Easy Tax simplifies tax rules accounting for landlords in the UK.

Other buy-to-let regulations revision:

Not just the tax changes, some other regulations have been changed, that the landlords have to be aware of for 2019:

  • The government wants to stop landlords from evicting tenants without acceptable reason – section 21 notices may end.
  • The letting fees ban is effective from June 01 2019. This means that the agents and the landlords can’t charge tenants with payments during the letting process.
  • For the better protection of tenants’ and landlord’s money, the government launched a new scheme on April 01. All private sectors agents had to sign up to the government-approved scheme before that date, or else they could be fined with a huge sum of £30,000. (The rule is applicable in England only.)
  • The government removed the three-storey rule from the Houses in Multiple Occupations (HMO) regulations in October 2018. It states that your property is an HMO if five or more tenants live in the building from two or more non-related households. Additionally, you need the right license.

To recapitulate:

Are you hit by new buy-to-let tax rules? Do you seek expert advice on how to go about tax filing? There may be workaround methods to mitigate the new rules, but there are many scenarios and possibilities to take care of.

An accounting and taxation expert like Easy Tax could help you all through the way of tax planning, filing, maximum tax deductions and tax saving. Our thorough analysis and accounting experience will help you unveil all the solutions and precise tax filing procedures.

Easy Tax decodes the taxation and accounting for you.

Please get in touch with us for all accountant services in the UK.

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