Tax Relief on interest - remorgage

[brighty73]

Is anyone able offer a little advice on the income (and potential CGT) tax implications of the following scenario:

4 yrs ago I bought a flat for £67K (£62K mortgage + £5K deposit) in Manchester.

Last summer I withdrew £20K from the equity (the flat was valued at approx £110K at that point in time) and used this as a deposit for a buy-to-let house in the Potteries. In October, once the BTL purchase was completed, I moved out of the Manchester flat and rented it out and temporarily moved into the BTL in order to get it into a rentable condition, with the intention of moving into a rented accomodation with my girlfriend). At this point I was requred to work away from home on a six month contract so, instead of letting the potteries house I used it as an occasional weekend base for myself and rented out a room to a lodger. On returning from the contract I moved back up to Manchester and am now renting with my GF...the Potteries house is now being rented out on a standard AST 6 month contract.

I have trawled many message boards and seen the Example 2 of BIM45700 so I have an idea what are and are not tax deductable 'expenses'.

Questions

1. When I withdrew the 20K of equity from the flat I did not have a BTL 'business' to speak of..but the intention was there to start one...so...am I entitled to deduct the interest on the extra 20K for income tax purposes ? I have more than a gut feeling that the answer is yes...the only doubt that I have is that I immediately used the BTL in the potteries as my permanent residence for over 6 months !!

2. At this point in time there is still enough equity in the property to remortgage again (I'm don't think that its really a suitable time to do so but that is not the point).....

a) If I withdrew further equity (say 25K making the total = 110K) and purchased another BTL I am assuming that the interest on the 25K would also deductable for income tax purposes - I am not overdrawn on my capital account - to borrow a phrase from somewhere - is this correct ??

b) If I withdrew further equity (say 35K making the total = 120K) and purchased another BTL I am assuming that SOME (25K) of the interest on the 35K would be deductable for income tax purposes - but 10K would not - is this correct ??

c) If I withdrew further equity (say 25K making the total = 110K) and purchased a PPR then NONE of the interest on the 25K would be deductable for income tax purposes - is this correct ??

And finally

d) Because I lived in the potteries home myself can I class it as PPR for future CGT - or will this conflict with scenario 1 above where I wish to deduct the interest of the 20K loan against income tax.

Thanks very much in advance for any help.