Hi All,
I’m doing my tax return for year ending April 2020 and in a kerfuffle with section 24 finance act 2015 ( landlords tax)
Say that my rental income is £50k
And my finance cost is £10k
And say no other allowable expenses
What is my taxable income?
Thanks in advance
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Help with tax on interest charges
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- Lemon Half
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Re: Help with tax on interest charges
anniesdad wrote:Hi All,
I’m doing my tax return for year ending April 2020 and in a kerfuffle with section 24 finance act 2015 ( landlords tax)
Say that my rental income is £50k
And my finance cost is £10k
And say no other allowable expenses
What is my taxable income?
Thanks in advance
Only a quarter of that interest cost is allowable as tax relief in the tax year 2019/20. Note it is "interest" which might be different to your mortgage payment that is used. If your buy-to-let mortgage (assuming that is what it is) is a "repayment" type, not an "interest-only" type you might to need to ensure you are using the right figure.
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- Lemon Pip
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Re: Help with tax on interest charges
Yes interest only btl mortgage
So taxable profit is £47.5 k ?
Thanks for prompt response. Your answer is what I feared
So taxable profit is £47.5 k ?
Thanks for prompt response. Your answer is what I feared
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- Lemon Pip
- Posts: 80
- Joined: November 8th, 2016, 4:27 pm
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Re: Help with tax on interest charges
I’m still puzzling over this. Looking on hmrc site ....
Tax at 20% on £47.5k is £9.5 k.
But it looks like there is something called 20% tax reduction for the remaining finance costs
20% x £7.5k is £1.5 k
So income tax is actually now going to be £8.0 k.
Have I got this right?
Tax at 20% on £47.5k is £9.5 k.
But it looks like there is something called 20% tax reduction for the remaining finance costs
20% x £7.5k is £1.5 k
So income tax is actually now going to be £8.0 k.
Have I got this right?
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- Lemon Quarter
- Posts: 1828
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Re: Help with tax on interest charges
anniesdad wrote:I’m still puzzling over this. Looking on hmrc site ....
Tax at 20% on £47.5k is £9.5 k.
But it looks like there is something called 20% tax reduction for the remaining finance costs
20% x £7.5k is £1.5 k
So income tax is actually now going to be £8.0 k.
Have I got this right?
Yes. The intention of the rules is to deny anything other than 20% tax relief on rental interest charges. It's just that you asked what your taxable income is, which is different to asking what your tax bill is.
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