Tax changes for buy to let landlords 2020

As well as a thriving sales department we are also proud to have one of the busiest Lettings Departments in the local area. We manage a plethora of properties to let in Virginia Water ranging from starter cottages all the way up to vast mansions on the Wentworth Estate.

So we consider it our responsibility to make sure that our existing and potential landlords are up to date on the various legislation changes that could affect them and their property in the coming year.

With the start of the financial year come several new tax changes which affect buy-to-let landlords, which include the end to the old system of mortgage interest relief and changes to capital gains tax deadlines.

Mortgage Interest tax relief

In the past landlords were able to claim tax relief on their mortgage interest payments. This meant that certain taxpayers could benefit from between 20% and 45% of relief depending on their taxpayer bracket.

In 2015 it was first announced that this kind of tax relief on mortgage interest was to be phased out over the following few years with the deadline aiming for 2020.

As of the beginning of this financial year, landlords can only claim a tax credit at the basic rate of 20% regardless of whether they are higher or additional rate taxpayers. This major change does not affect other allowable costs such as council tax, water rates, insurance and agent fees which still can be deducted from rental income.

Reduction in Capital gains tax relief

When a landlord sells a buy-to-let property, they must pay capital gains tax on any profit they make which is above the annual capital gains allowance (currently £12,000). Basic rate taxpayers must pay 18 per cent in capital gains tax on gains above this threshold, whilst higher rate taxpayers must pay 28 per cent.

Before the start of this tax year, homeowners who lived in a property and then decided to let it out could claim tax relief of any gains made in the final 18 months of ownership – this has now been reduced to 9 months.

There have also been some restrictions when it comes to lettings relief. If a let property was jointly owned by a couple who sold, they were able to claim £40,000 each in capital gains relief. Under the current rules, they would now only be able to claim if they were living in the property when it was sold.

This year if you are a landlord and sell your property you are likely to have capital gains tax to pay on the profits; the new law states that you will have to pay an estimate of the tax payable within 30 days of the completion date.

Get in Touch

Are you thinking of moving to the area or buying a property to let? Make sure you take a look at our amazing catalogue of properties for sale in Virginia Water and the surrounding areas.

If you’d like to speak to someone about properties to let in Virginia Water, a member of our expert team would be happy to help. You can call us on 01344 843000 or email us. You can also follow us on Facebook, Twitter, Instagram and LinkedIn.

Image editorial credit: TK Kurikawa /