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

HMRC guidance

Brightonian
Posts: 99
Joined: Wed Aug 06, 2008 3:31 pm

HMRC guidance

Postby Brightonian » Fri Apr 05, 2019 10:00 am

Some time ago, there were articles in the tax press about the allowability of interest on a remortgaged buy to let property. I had always believed that it was fine to claim interest on a remortgage up to the level of the value of the property when it was first let. However, I read that HMRC changed its guidance in 2017 and there was now some doubt, as the new guidance simply said that the new loan must be wholly and exclusively for the purposes of the letting business. Opinions differed as to whether this was a genuine change and hardening of HMRC's attitude or whether it was just clumsy drafting. Opinions also differed as to whether or not this would exclude claiming interest relief where the borrowing was used for a private purpose.
Does anyone know if there has been any clarification of this issue?

bd6759
Posts: 3107
Joined: Sat Feb 01, 2014 3:26 pm

Re: HMRC guidance

Postby bd6759 » Fri Apr 05, 2019 12:36 pm

https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim45700

someone
Posts: 383
Joined: Mon Feb 13, 2017 10:09 am

Re: HMRC guidance

Postby someone » Sat Apr 06, 2019 8:01 am

https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim45700
I'm not the OP but thank you. It is as I understood but I'd have been looking in pim rather than bim if I'd tried googling this.

Brightonian
Posts: 99
Joined: Wed Aug 06, 2008 3:31 pm

Re: HMRC guidance

Postby Brightonian » Mon Apr 08, 2019 10:28 am

Thank you for your very helpful reply. I have looked at BIM 45700. The only thing that concerns me slightly is that my client differs in two respects from the example given (example 2). He previously had no mortgage on the property and it has been let for a number of years - he has not just started letting it out. Would this make any difference? The amount he is planning to borrow for a private purpose is less than the market value of the flat when it was first let out some years ago.


Return to “Property Taxation”

cron