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Where Taxpayers and Advisers Meet

Restricted Finance Costs for BTL - yes/no what basis?

anjo56
Posts:30
Joined:Wed Nov 29, 2017 8:27 pm
Restricted Finance Costs for BTL - yes/no what basis?

Postby anjo56 » Wed Jan 27, 2021 4:10 pm

My son is filling in his first tax return for a BTL bought in 2019. He understands that the mortgage interest allowable as an expense is limited to 25% for 2019-20 but what about the £999 mortgage arrangement fee with the bank, the £35 telegraphic transfer cost? He thinks these are restricted too but wonders if the mortgage advisor fee of £295 is a restricted finance cost too or can be claimed in full as professional fees? The solicitor's bill also has items for mortgage lender fee and telegraphic transfers. Can these finance items be used in his tax return too - restricted to 25%? Hopefully, a quick answer is out there! Thanks for your help.

bd6759
Posts:3772
Joined:Sat Feb 01, 2014 3:26 pm

Re: Restricted Finance Costs for BTL - yes/no what basis?

Postby bd6759 » Thu Jan 28, 2021 8:58 pm

Costs of finance are restricted as well as the interest.

S272B(5)(c) Income Tax (Trading and Other Income) Act 2005

maths
Posts:8447
Joined:Wed Aug 06, 2008 3:25 pm

Re: Restricted Finance Costs for BTL - yes/no what basis?

Postby maths » Fri Jan 29, 2021 6:32 pm

Don't forget that whilst a deduction for costs of a dwelling related loan are limited (25% in 19/20) there is in addition a basic rate tax reducer for the balance.

anjo56
Posts:30
Joined:Wed Nov 29, 2017 8:27 pm

Re: Restricted Finance Costs for BTL - yes/no what basis?

Postby anjo56 » Wed Feb 03, 2021 5:18 pm

Got it. Many thanks, both.


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