The Chancellor announced that the amount of income tax relief landlords can get on residential property finance costs (such as mortgage interest) will be restricted to the basic rate of tax. To give landlords time to adjust, the change will be phased in gradually over a 4 year period:
- 2017/18 – the deduction will be restricted to 75% of finance costs, with 25% being available as a basic rate tax reduction.
- 2018/19 – 50% finance costs deduction and 50% given as a basic rate tax reduction
- 2019/20 – 25% finance costs deduction and 75% given as a basic rate tax reduction
From 2020/21 – all financing costs incurred by a landlord will be given as a basic rate tax reduction.