Income Tax relief for interest against rental income is being restricted to the basic rate of tax, with the restriction phased in over four years. This began in 2017/18; in the third year of the new rules, 2019/20, only 25% of interest paid will be allowed as a deductible expense. The remainder will be eligible for a reduction in tax liability at 20%. The rules are complicated and can produce unexpected results.
Annual Tax on Enveloped Dwellings
The annual tax charges on residential properties worth more than £500,000 that are owned through companies and other ‘envelope’ arrangements will go up for 2019/20 in line with inflation. The charge on a dwelling worth between £500,000 and £1 million will be £3,650 (up from £3,600); the maximum charge on a dwelling worth over £20 million will be £232,350 (up from £226,950).