BTL Property Mortgage Broker Fees

Mortgage Broker Fees - Fully allowable expense, or apportioned with new Finance Act?

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My question is this, currently since April 2017 mortgage interest costs on a BTL property are reduced on a sliding scale from 25% disallowable expense Yr 1 (2017 - 2018) and increasing yearly until 2020. 

When looking at the HMRC website, not only is the interest disallowed, but so too are the fees in getting the mortgage, in this case, I refer to the finance providers fees, or mortgage company product fees, often around £1k - £2k. This I can understand, interest and finance charges disallowed.

Now what about Broker Fees? Is the "Broker" not acting as a professional in this instance, whereby they are sourcing you the best finance deal avaialble, and therefore can their fees be fully charged as an expense, and not apportioned by the disallowable portion (25% Year 2017 - 2018)

Now, I do realise that most brokers only charge when a mortgage is taken up or offered, however, what about a scenario whereby you approach a broker, you have to pay his fees in advance and no product is suitable? This, in my thinking, is that this becomes an allowable expense, and therefore, chargeable to the P&L; even though no product has been taken. Or the opposite could be true, you take up a mortgage, their fees are due, now can these therefore not be charged to the P&L?

Or, I may dislike any product the Broker finds, go and choose another broker and start the entire process again. I see no guidance on this, other than charges incurred in, "Obtaining The Finance" but the difference that I see is that the broker is not providing the finance, just simply professionally advising you of products availble to suit your needs.

Anybody have any views on this? It would be very much appreciated

 

 

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JCACE
By jcace
26th Apr 2018 14:53

Incidental costs of obtaining finance are explained in s58 of ITTOIA 2005
(2) "Incidental costs of obtaining finance” means expenses—
(a)which are incurred on fees, commissions, advertising, printing and other incidental matters, and
(b)which are incurred wholly and exclusively for the purpose of obtaining the finance, providing security for it or repaying it.

(3)Expenses incurred wholly and exclusively for the purpose of—
(a)obtaining finance, or
(b)providing security for it,
are incidental costs of obtaining the finance even if it is not in fact obtained.

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