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Posted Fri, 21 Oct 2022 14:15:05 GMT by RhiannaP
Can we still declare the interest we pay on a buy to let property mortgage? I used to but when I submitted my 2020/21 SA I heard we could no longer deduct this from our profit. I have since read that it should be added to the residential finance section. I have gone in and amended my SA for that year but it doesn't appear on the deductions and the tax to pay is unchanged. What's the point in entering it if it doesn't get deducted?
Posted Mon, 24 Oct 2022 10:25:42 GMT by HMRC Admin 17

Hi,
 
Thank you for your question.

You can claim residential finance costs in the property section of your Tax return using box 44 "Residential property finance costs". Prior to 06/04/2017, you would have been able to claim tax relief on mortgage interest at the highest rate at which you pay tax.

However, from 06/04/2017, finance costs are now restricted to the basic rate of income tax.

These changes were phased in from 06/04/2017 and was fully in place from 06/04/2020.

For further information, please view the following page on gov.uk:                                                                                                 

www.gov.uk/guidance/changes-to-tax-relief-for-residential-landlords-how-its-worked-out-including-case-studies     .
Posted Mon, 24 Oct 2022 10:28:33 GMT by HMRC Admin 17

Hi,
 
Thank you for your question.

You can claim residential finance costs in the property section of your Tax return using box 44 "Residential property finance costs". Prior to 06/04/2017,
you would have been able to claim tax relief on mortgage interest at the highest rate at which you pay tax.

However, from 06/04/2017, finance costs are now restricted to the basic rate of income tax.

These changes were phased in from 06/04/2017 and was fully in place from 06/04/2020.

For further information, please view the following page on gov.uk:                                                                                                 

Tax relief for residential landlords: how it's worked out    .

Thank you.
Posted Thu, 01 Dec 2022 21:15:02 GMT by martiniy91
Hi, I am still confused about claiming relief in buy to let mortgage interest. Can you confirm if it can be claimed? 20% is mentioned, but I am unsure where to claim it, if I need to calculate it or if I shouldn't do anything. If my total mortgage interest is £2,500 On my tax return should I: Option 1. Under residential property finance costs - add £2,500 Option 2. Under residential property finance costs - add £500 Option 3. add £0
Posted Fri, 02 Dec 2022 16:35:24 GMT by HMRC Admin 20
Hi martiniy91,

More information is available on the following link.
PIM2054 - Deductions: interest: restriction for income tax purposes from 2017/18: introduction.

Thank you.
Posted Fri, 02 Dec 2022 17:13:13 GMT by martiniy91
Thank you for sending this link, however this doesn't answer my question. I have posted the question below again for ease of reference: Can you confirm if it can be claimed? 20% is mentioned, but I am unsure where to claim it, if I need to calculate it or if I shouldn't do anything. If my total mortgage interest is £2,500 On my tax return should I: Option 1. Under residential property finance costs - add £2,500 Option 2. Under residential property finance costs - add £500 Option 3. add £0
Posted Mon, 05 Dec 2022 17:54:05 GMT by HMRC Admin 10
Hi martiniy91
Thank you for your question.
You can claim residential finance costs on your mortgage interest payments.
This is now basically a 'tax reducer' this means you do not include as expenses,for example if your overall tax bill is say £1000, and your finance costs are £250.
We follow this example calculation £250 x 20%= £50.
£1000- £50 = Overall tax bill £950.
I hope this makes more sense.
You include under residential finance costs on the online return or SA105 box 44 on a paper return.
I have included SA105 notes to explain.
The system will work this out for you as long as you include the figure box.
Property expenses
Regards.
Posted Thu, 15 Dec 2022 17:08:45 GMT by John Kelly
Hi, I just want to check what Mortgage Interest is, before I do the mortgage interest tax relief calculation. For instance, if I use a simple example whereby my mortgage loan amount is £100,000 with an interest of 2%, then would I use the Annual Interest in the calculation, ie. 100,000 x 0.02 = £2,000 ? And when I have done the mortgage interest tax relief calculation, where do I put it on the Self Assessment? Do I put it in the Residential Property Finance Costs box? Hope you can help.
Posted Mon, 19 Dec 2022 11:46:28 GMT by HMRC Admin 17

Hi,
 
Thank you for your question.

In relation to your question, since 6th April 2017, finance costs have been restricted to 75% of costs, finally reducing to 20% as basic rate from 6th April 2020 and is used as a "reducer" so would not be used as an expense.

You are correct, within the SA105 Property pages, you would insert your costs in Box 44 "Residential Property Finance Costs"

Please see the following link on gov.uk which outlines the subject in more depth:

Property Income Manual    . 

Thank you.

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