From April 2017, relief will gradually be withdrawn for interest paid on borrowing related to property letting by individuals.
- For 2017/18 only 75% of the interest will be fully relieved.
- For 2018/19 only 50% of the interest will be fully relieved.
- For 2019/20 only 25% of the interest will be fully relieved.
For these years, the balance of the interest paid on borrowing will obtain relief at basic rate only. From 5 April 2020, relief will be available only at basic rate for all interest paid on borrowing.
Full interest relief will remain available for the letting of property which qualifies as furnished holiday accommodation, businesses and commercial properties.
Could this be the catalyst for more modest property portfolios being held in corporate structures?
Further, the wear and tear allowance for furnished properties, at 10% of rent received less expenses suffered by the landlord, will not be available from 6 April 2016 and will be replaced by a relief which relates more directly to the actual renewing of furnishings.