A restriction on the tax relief landlords can claim for finance costs on residential properties at the basic rate of income tax.
Finance costs included:
The restriction was introduced to make the system fairer ensuring landlords with higher incomes could no longer receive the generous tax treatment, therefore it has been replaced with the 20% tax credit, so it’s restricted to the basic 20% tax rate.
It only affects you if you’re a higher rate taxpayer as you used to be able to claim back 40%.
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