Landlords with properties in their own name have just come to the end of the most recent tax change, as the sliding scale for rental income being added to personal income ended in April 2020.
That means any tax returns going in for the 2020/21 tax year will have the full rental income added to their personal income and taxed at their full marginal rate.
Such landlords can, however, claim back 20% of the mortgage interest they have paid as a tax credit. This means for basic rate taxpayers there is little overall change but for higher or additional rate taxpayers the amount of tax they pay will roughly double the old tax regime.
Despite all these changes, owning rental investment property continues to be popular and the use of limited companies to do so in what is for many a more tax-efficient way is growing significantly. If you would like to know more about the options landlords have prior to discussing with an accountant, please contact us.
Coreco are not tax advisers and you should check your personal position with a fully qualified tax adviser