This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

Self Assessment - Loan Interest

deeno
Posts:13
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:3228
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:13
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!


Return to “Property Taxation”