Mortgage interest - tax relief?

In relation to Box 44 Am I right in saying that the HMRC will automatically allow the rate of deduction on it's online system? Can I also put in the "arrangement fee" for my interest only mortgage as the same is reviewed at least every 2 years. Many thanks

Hi Is interest on interest only loan a finance cost against property income. Thanks

Hi HWANDDE
Thank you for your question.
An individual customer may deduct from his or her tax liability for the year an amount equivalent to the otherwise unrelieved interest and finance costs multiplied by the basic rate of tax for the year in question.
The net effect of these changes is that interest and finance costs are relievable only at the basic rate of tax rather than at a customer’s highest rates. More information can be found at :
Deductions
There is a specfic box on the tax return where you would enter quallifying interest and finance costs.
The box is called "Residential finance costs.

Hi HMRC, Thank you for your reply. I understand that I can claim either the -Property allowance (£1,000) or -Allowable expense & mortgage interest, but not both. I need to make the choice. If I fill in the SA105, Box 20.2 (Property allowance) and Box 24-29, 44 (Allowable expense)? Will HMRC help me to choose which is beneficial for me? Thank you

Hi Edward Bartlam,

Yes, the online system will automatically allow this. The arrangement fee can be added to the interest figure you are entering here.

Thank you.

I have entered the interest only payments in box 43: Residential property finance costs for my 2022/23 return. Section 44 is not showing on the tax return on line. . However, the final calculation has not made any reduction in my total tax. I still am being charged tax as if I was not paying any interest. What do I do now?

Hi Karla Tully
Thank you for your question.
There are times when no tax reduction will be given in respect of the finance charges.
For example if you have made a loss on your rental income because of other expenses no tax reduction will be given because no tax has been charged on the income.
In this case you would have to carry forward the unused finance charges.
The following link gives examples of when no tax reduection will be given or it is reduced.
Tax relief for residential landlords: how it's worked out
If you think your calculation should have included a tax reduction in respect of your finance charges then please phone us to discuss.
Self Assessment: general enquiries

Hi derek_er Chan,

If you choose to apply the property allowance of £1000.00 (box 20.2), you cannot claim anything else, this include residential property finance costs (box 44).
If you choose to claim expenses, you can claim property finance costs.  
You will need to work out which gives the most tax relief yourself, we cannot give financial advice.  
Work out how much tax relief £1000.00 gives you and then compare against the expenses and finance relief.
You can always amend your tax return (withinn 2 years) once it is submitted, should you wish to change your claim.

Thank you.

Hi, I rent out a property with my husband. We don't earn that much from it and previous years have not filled in a Self Assesment Form, rather just submitted our earnings from rent on our personal tax accounts online with HMRC. How would be go about claiming the tax back from mortgage interest? Would we need to start doing a self assesment form? Thanks 

Hi,
 

You can send in a letter with the details. You would need to confirm the annual amount each year for interest only and this would be applied according the expense/relief for the year(s). Please note you can now only go back to 19/20 as earlier years are out of date  . THank you.

Dear HMRC Admin 10 I am grateful for your prompt response to my previous inquiry. I apologize for any confusion caused. To clarify, My friend and I purchased a property together, with my friend contributing 50% of the purchase price in cash, and I obtained a mortgage solely in my name for my 50% share. The property is registered solely in my name. We have a declaration of trust that outlines the beneficial ownership distribution. As per our declaration of trust, my friend is designated as the 50% beneficial owner of the rental income, while I am designated as both the 50% beneficial owner of the rental income and the 100% beneficial owner of the mortgage payments. Considering this arrangement, I kindly request your guidance on the tax treatment of mortgage expenses. As the sole owner responsible for the mortgage payments, am I eligible to claim the mortgage expenses solely for myself? I appreciate your assistance in this matter.

Hi Saz Mo
Per previous reply, as you are the only one with a mortgage for your 50% share of the property and make all the mortgage payments you can claim relief for the mortgage interest against your share of the rental income.
Thankyou.