Landlords can still claim billions in tax breaks

Landlords could be worrying too much about the impact of tax changes that are underway, according to new research.

Freedom of information tax statistics reveal that landlords were given £17.5 billion in tax breaks by the government last year.

The money went towards everything from tax relief on mortgage interest payments to fixing kitchen sinks.

Although many landlords are concerned they will be out of pocket once mortgage interest relief restrictions start to pinch in 2020-21, the figures show mainly higher and additional rate taxpaying landlords will be affected.

The Treasury expects to take an extra £840 million a year in tax from landlords by then – but that still leaves tax breaks of £16.4 billion available.

And only £7 billion went on mortgage interest relief. The net highest amount was £3.7 billion on repairs and maintenance.

Stephen Ludlow, chairman of Ludlow Thompson said: “Despite tightening, buy-to-let tax breaks are still very valuable, highlighting that rental property remains a highly attractive investment vehicle.

“Those tax breaks are essential to ensure that landlords continue to invest in maintaining their properties. If the tax breaks are reduced further, then landlords will cut their investment in the properties they own – reducing the standard of UK rental accommodation.”

Meanwhile, a worrying report suggests HM Revenue & Customs is pressurising mortgage brokers to tip them off if they suspect a customer is evading tax or money laundering.

The Association of Mortgage Intermediaries warned that advisers could take the blame if they don’t report suspicious income or profits.

Brokers are expected to file a report to HMRC without telling their clients if they uncover dodgy dealings.

A HMRC spokesman said: “HMRC has a robust strategy for tackling evasion and avoidance in the rental sector, collecting and analysing data gathered from a wide range of sources to understand and manage this risk to the tax system, and identify where there may be undeclared income.”