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Mortgage Interest

if 50% is claimable, can the other 50% still be apportioned to "other finance costs"?

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I have several clients who own property.  At an HMRC webinar a few years back the speaker said that the allowed percentage  of mortgaage interest could be claimed as an expense with the rest being claimed as "other finance costs".  I just wanted to check that this is still the case, but I cannot find any reference to this on the HMRC website

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Scooby
By gainsborough
01st Aug 2019 14:40

I think you have misunderstood. For 2018/19, 50% of interest and finance charges can be claimed as a deduction. The other 50% is given as a 20% tax reducer and reduces the tax liability (so effectively only basic rate tax relief given on the latter).

For 2019/20, the deduction will be 25%, with the other 75% given as a BR tax reducer. For 2020/21, all mortgage interest will be relieved at 20% as a tax reducer.

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Replying to gainsborough:
By SteveHa
01st Aug 2019 14:41

Quote:
For 2019/20, the deduction will be 25%, with the other 75% given as a BR tax reducer.

You have that the wrong way around. In 19/20 25% will be a deduction and 75% given as the tax reducer.

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Replying to SteveHa:
Scooby
By gainsborough
01st Aug 2019 15:01

*I think that's what I said?

*EDIT - Sorry, my bad, there may have been a minute with the wrong percentages before I realised my mistake - thought I had caught it before posting but obviously not!

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By mrme89
01st Aug 2019 14:39

You need to complete some CPD!

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Replying to mrme89:
Scooby
By gainsborough
01st Aug 2019 14:44

mrme89 wrote:

You need to complete some CPD!

Yes...and also check that you completed 2017/18 returns correctly (deduction 75%, tax reducer of 20% on remaining 25%)!

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By Vallery Lee
01st Aug 2019 15:56

Thanks to all for your responses. I am confident that I have dealt with the matter properly but could not find the confirmation of my understanding - you have all clarified it for me

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By Jholm
01st Aug 2019 16:16

Usually in most (if not all software), the full amount goes in as 'finance costs subject to restriction' (or similar). This will then deducted the allowable portion, being 50% for 18/19, and leave the remainder eligible for BR relief.

Of course, it gets more complicated if the amount eligible for 20% relief is also restricted and some become unused, then carried forward and so on

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Replying to Jholm:
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By Tax Dragon
01st Aug 2019 17:22

Jholm wrote:

Usually in most (if not all software), the full amount goes in as 'finance costs subject to restriction' (or similar). This will then deducted the allowable portion, being 50% for 18/19, and leave the remainder eligible for BR relief.

That's how ours works.

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