The biggest change in the buy to let market over the last 3 years has been the way in which landlords are taxed on their rental income.
The rate at which you pay tax is based upon your personal income tax rate and ranges from 0% – 45%. As of April 2020, you will be taxed on all your rental income after allowable expenses, this no longer includes monthly mortgage payments. You will then receive a 20% tax credit based on your mortgage payments.
If you are a basic rate taxpayer you won’t be affected by the changes however, if you are a higher rate or additional rate payer then you will notice an increase in your tax liability.
One of the ways landlords are now looking at the situation is by purchasing properties via a limited company rather than in their own personal name. As the limited company owns the property the tax implications are different. I work closely with accountants who can help guide my clients through the pros and cons of each scenario and help them decide which way works best for them.