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Where Taxpayers and Advisers Meet

Self Assessment - Loan Interest

deeno
Posts: 11
Joined: Tue Mar 26, 2013 12:50 am

Self Assessment - Loan Interest

Postby deeno » Wed Jan 09, 2019 11:22 am

Hi

Can you please advise when submitting self assessment return for 2017/18 do I need to submit total loan interest paid or adjust to 75%?

e.g. property income £15k and loan interest £10k - do I submit £10k or £7.5k interest payment? It is not clear to me if £7.5k on how i claim then claim 20% tax relief on this amount as a high rate tax payer as my profit increases from £5k to £7.5k so I pay 40% on full amount.

Thanks in advance

Dee

robbob
Posts: 2726
Joined: Wed Aug 06, 2008 4:01 pm

Re: Self Assessment - Loan Interest

Postby robbob » Wed Jan 09, 2019 12:15 pm

do I need to submit total loan interest paid or adjust to 75%?
You follow the advise per hmrc guidance - you only enter 75% of finance costs in box 26 - the other 25% goes in box 44


https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/690391/sa105-Notes-2018.pdf

Residential property finance costs restriction
For the 2017 to 2018 tax year, you can only claim
75% of the cost of getting a loan, or alternative
finance to buy a residential property that you
let, and 75% of any interest on such a loan or
alternative finance payments.
For example, if you incurred £4,000 in interest on
such a loan:
• include £3,000 (75% of £4,000) in box 26
• put £1,000 (25% of £4,000) in box 44 – this
will be used to calculate a reduction in your
Income Tax
If you’re claiming finance costs on a residential
property, you won’t be able to add up all of your
expenses and put them in box 29 (where your
turnover is below £85,000) as usual. All other
allowable property expenses (including finance
costs on non-residential properties) can be added
together and put in box 29, but the allowable
amount (75%) of finance costs on residential
property must go in box 26.

deeno
Posts: 11
Joined: Tue Mar 26, 2013 12:50 am

Re: Self Assessment - Loan Interest

Postby deeno » Mon Jan 14, 2019 11:52 am

perfect - many thanks robbob!


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