Buy To Let tax changes

Buy to Let (BTL) tax changes. From 2017/18 tax year the way you can claim mortgage interest against your BTL income changes. Previously, the interest was deducted from your rental income and the profit added to your overall income and taxed at your prevailing rate. Now you will simply receive a 20% tax credit for your mortgage interest that will be deducted from your tax bill. This means there is no difference if you are a basic rate tax payer, but you will be paying more tax if you are a higher rate payer. Also because the interest is not an expense, but just a relief, this will increase your income, possibly moving you from a basic to higher rate tax payer. This change is being phased in from tax year 2017/18 over a four year period.