Buy to let interest deductions 2017/18

[Bonners]

Looking at the 2017/18 tax return, I am a basic rate tax payer.

I have buy to let mortgage interest.... do I have to only claim 75% of this as a deduction against income ? And is there a tax credit against the unclaimed 25% ?

Any advice appreciated

[robbob]

Hello Bonners

Yes this this the case - with regard to 25% - you get a 20% tax credit on this amount to set against tax you pay on the property income itself or most other taxed income - you cannot set credit against tax on savings income or dividend income though.

[Bonners]

Thanks for that much appreciated, where do I find the box on the return to claim the 20% tax credit please ?

Sorry to be a pain !!!

[robbob]

Morning Bonners

where do I find the box on the return to claim the 20% tax credit please ?

the 25% total goes in box 44 on ukp 2 - and the credit should magically flow through from their if available.

[someone]

Hello Bonners

Yes this this the case - with regard to 25% - you get a 20% tax credit on this amount to set against tax you pay on the property income itself or most other taxed income - you cannot set credit against tax on savings income or dividend income though.

Interesting. Are you saying that the tax credit on the 25% of finance costs should be claimed even if there's no (net) property income?

For 2017-18 I made a loss on property (which I carry forward). I put just over 800 in box 44 which I assumed would carry forward to next year (it doesn't seem to have affected my tax calculation).

[Bonners]

Thanks Robbob, much appreciated

[robbob]

Hello someone

Interesting. Are you saying that the tax credit on the 25% of finance costs should be claimed even if there's no (net) property income?

i didn't mean to say that no - and the answer to your question is no you can't claim tax credit if there is no property profit.

all i was trying to illustrate (probably very poorly) was that its ones overall adjusted income being above the pa that matters with regard to getting the tax credit (subject to the fact that a matching property profit must exist and also other restrictions highlighted below) so the other income does come in to play so as to speak when doing the calculation to prove one has paid some tax.


Its probably best to quote the full chapter and verse of the details.

How the tax reduction is worked out
The reduction is the basic rate value (currently 20%) of the lower of:
finance costs - costs not deducted from rental income in the tax year (this will be a proportion of finance costs for the transitional years) plus any finance costs brought forward
property business profits - the profits of the property business in the tax year (after using any brought forward losses)
adjusted total income - the income (after losses and reliefs, and excluding savings and dividends income) that exceeds your personal allowance
The tax reduction can’t be used to create a tax refund.
If the basic rate tax reduction is calculated using the ‘property business profits’ or ‘adjusted total income’ then the difference between that figure and ‘finance costs’ is carried forward to calculate the basic rate tax reduction in the following years.
You’ll still be able to deduct some of your finance costs when you work out your taxable property profits during the transitional period. These deductions will be gradually withdrawn and replaced with a basic rate relief tax reduction:

[someone]

Hello someone

Interesting. Are you saying that the tax credit on the 25% of finance costs should be claimed even if there's no (net) property income?

i didn't mean to say that no - and the answer to your question is no you can't claim tax credit if there is no property profit.

Thanks for the update - that means I don't have to amend my tax return as (I hope) I've got it right