Deduction of interest against property income ― income tax rules

Produced by a Tolley Owner-Managed Businesses expert

Owner-Managed Businesses

Guidance

Produced by Tolley in association with Rob Durrant-Walker of Crane Dale Tax

This guidance note sets out the restriction on the deduction of interest again rental income for individuals with a residential property letting businesses.

Interest costs for income tax purposes

An area that commonly raises questions regarding its deductibility against rental income is interest (often the single biggest cost for a landlord).

The rules are different for income tax and for corporation tax. For corporation tax rules, see the Deduction of interest against property income ― corporation tax rules guidance note.

Prior to 2017/18 (see below), interest was treated as a revenue expense for both commercial and residential properties, with the incidental costs of obtaining loan finance specifically allowed as revenue costs.

From 2017/18, the method of relief for residential property changed. Furnished holiday lets (FHL) for this purpose are specifically excluded from the change and treatment for interest costs remains aligned with commercial property. However, FHL treatment is expected to re-align with ordinary residential lets in all regards

Access this article and thousands of others like it
free for 7 days with a trial of Tolley+™ Guidance.

TAKE A FREE TRIAL

Popular Articles

Personal Tax

VAT on property disposals

VAT on property disposalsThis guidance note provides an overview of the VAT treatment of selling property that is located in the UK. The UK includes Great Britain, Northern Ireland and the territorial sea of the UK. The sale of any land or building located outside the UK is outside the scope of UK

14 Jul 2020 13:57 | Produced by Tolley Read more

Personal Tax

Timing of disposal for capital gains tax

Timing of disposal for capital gains taxDate of disposalThe date of the disposal determines the period in which the gain is subject to capital gains tax (CGT). When the rates of CGT change, the determination of the date of disposal can also affect the rate of CGT that applies to the gain.See the

14 Jul 2020 13:50 | Produced by Tolley Read more

Year-end tax planning

Employment Tax

Fuel-related payments / mileage payments

Fuel-related payments / mileage paymentsIntroductionMost employers will make payments to employees in relation to business travel. Among the most common payments in relation to business travel are fuel and mileage payments. If an employer does not reimburse these amounts, then the employee will be

14 Jul 2020 11:46 | Produced by Tolley in association with Philip Rutherford Read more

��˾��ҹ��