Residential property finance costs - Box 44

Is it correct that one can get 20% relief against BTL mortgage interest from tax year 20-21? If you have an interest only BTL mortgage, do you put the full interest only mortgage paid in the TY in Box 44? If you have not entered this interest value since 20-21 can you carry forward and enter into box 44 the total BTL mortgage interest paid since 20-21 in box 44?

Hi ,
 

You can only claim the relief in the tax year that it is for and yes it is restricted to 20%. You enter the interest charged in the return and the calculation will show the restricted relief due  . Thank you .

Not HMRC...my reply on similar post...Not HMRC...the reason you cant claim it all at once later is because each year needs to be considered by reference to the property profit only, the interest tax credit is restricted to this regardless of other income, and, if it covers the basic rate element in full any unusued amount is then carried forward as unused and added to the following year, and repeat, and repeat. This makes making an overpayment releif claim problematic, unless the profit from property fully supports all the interest claimed in each individual year (the full amount is claimed but relieved at 20%). You need to look at each year in isolation...EXAMPLE ONLY...if property profit in year one was £5000 and interest paid was £4000 then you would get the full £4000 at 20% i.e. £800 as a tax credit against it, reducing overall tax due by £800, if however property profit was £5000 and interest was £6000 then you would get the reduced amount of £5000 at 20% tax credit, i.e. £1000, and the balance £1000 of interest would be carried forward to the following year...at no point do you consider ANY other taxable income in working out the tax credit...property income only. So you need to review each year individually to make the claim for the interest by reference to assessable profit from property individually. If each year the interest is less than profit, great, you can claim it all in each year as it happened, if not then you need to carry forward unused interest and add it to the next year and work that out, and so on...