Further to the announcements made in The Summer Budget 2015, we are now less than 5 months away from the introduction of the highly publicised restriction on finance costs on residential buy to let properties.
Just last month, a legal battle led by Cherie Booth (QC) failed in an attempt to seek a full judicial review of the proposed legislation, leaving landlords feeling unfairly treated and facing the realisation that the new rules, however harshly perceived, will be coming into play and may have a huge impact on future tax liabilities.
As most landlords will be aware, the new rules (introduced by S24 Finance Act 2015) will restrict the tax relief available on finance costs associated with Buy to Let properties with effect from 5 April 2017. After this date, rental profits will need to be calculated without the inclusion of associated finance costs. A separate tax reduction relief can then be deducted when calculating a landlord's tax liability.