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Posted Sat, 12 Aug 2023 16:45:34 GMT by Sam Pun
Dear Sir, I am inputting the figure of tax yar 2022-2023 online. I have a letting property with mortgage to earn my rental income. As per my understanding the finance cost - mortgage interest expense can claim a tax relief. It can be claim 20% of the financal cost. e.g. £7,668 was the interest i paid in tax year. 20% of it = £1533.6 should be deduced my payable tax. However when i entered the amount in "Residential property finance costs "field. and submitted my form. In the section " how we have worked out your income tax", I can only see "minus Relief for finance costs £7,668.00 reduced to maximum allowable" but the amount right to it is £0 x 20% thus the total was also £0. and no reduction on "Income tax due after tax reductions." Can you tell me what wrong with my input /?
Posted Mon, 14 Aug 2023 14:17:42 GMT by HMRC Admin 10
Thank you for your question.
Firstly, your understanding is correct, you may claim interest paid on a mortgage at the restricted rate of basic rate, so in your case, 20% of the £7,668.00, which you have stated totals £1533.60.
The information inputted into your Tax Return will determine how much relief is given against any property income profits for that given year.
It appears in your case that a large enough profit was not made during the 2022/2023 tax year to use said relief against, for example a loss has been made.
I would advise that you would have to carry forward the unused finance costs to a future year.
The following link gives further information when no tax reduction 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

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