Summer is coming. For most of us in fact, it’s already here.
After last week’s 30-degree heatwave across most of the country, you could be forgiven for allowing your thoughts to drift towards shedding work clothes for something a little more tropical.
Maybe you’re thinking that now is a good time to let out your holiday home; you wouldn’t be wrong. However, it’s important to remember certain changes to the way taxation on buy-to-let properties that were recently passed.
Under the old rules, landlords could claim tax relief on their mortgage payments at their marginal rate. Higher-rate earners could claim 40%. April’s budget established a flat rate of 20%, meaning that many landlords have had their profits hit hard.
There is good news however…
Holiday homes are the only exception.
If your holiday rental qualifies as a “furnished holiday let”, special tax treatment applies. This means that you can still obtain higher and top-rate tax relief on mortgage interest payments. What’s more those returns from holiday letting can be remarkable: somewhere in the region of £12-15,000 per year for the average two-bedroomed cottage in the UK.
Think of AIMS when you find yourself with better use of losses and access to capital allowances, as well as entrepreneurs’ relief.
AIMS accountants provide relief to over 17,000 clients across the county, many of them landlords. For advice on taxation and letting, get in touch.