Chancellor changes tax relief for landlords

George Osborne made some key changes on tax relief for landlords in his recent budget. The amount of tax relief available on interest only mortgages will be restricted to the basic rate of tax (currently 20%). This will be introduced gradually over four years starting in April 2017. The measure is intended to address the unfairness of the current system where homeowners receive no tax relief on their mortgage payments. The wear and tear allowance is also being removed. Currently, landlords can deduct 10% from taxable profits for wear and tear. Landlords often use this allowance to buy furniture and this will impact on the tax position of many of them. Live in landlords fair better with the relief increased from £4,250 to £7,500. This is the first increase since 1997!

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