7th
Apr 2022
UK PRS landlords’ tax relief claims in 2021 was higher than 2020 according to an estate agents latest research.
The claims rose from £18.1bn in 2020 to £128.5bn in 2021 even though the amount of tax relief on mortgage interest has been drastically reduced over the last few years.
The biggest percentage of tax relief claims from landlords is from loan interest at 37% which accounts for £6.9bn; maintence, property repairs and renewal claims back makes up the second highest at 24 per cent and was worth £4.5bn.
As well as repairs, maintenance and renewals, tax relief can be claimed back on many costs, such as insurance, professional fees and of course mortgage interest payments.
The agents advises landlords they should take advantage as much as possible of the many available tax reliefs to make sure they are ready for the changes to the Energy Performance Certificates, where properties will have to be upgraded to grade C or higher for new tenancies in 2025 and for all by 2028.
However it does warn landlords to be absolutely sure that any energy efficiency improvements are not classed as capital improvements which are not eligible for tax relief; installing double glazing, modern boilers and such like are allowed under renewals, repairs and maintenance.
Stephen Ludlow of the estate agents, says: “There are currently no specific reliefs available to help landlords improve the energy efficiency of their properties in time for the deadline. Landlords may be able to make careful use of the repairs, maintenance and renewal allowance to replace fixtures such as boilers with more energy-efficient models.”
“There is a strong argument that the Government should provide more generous tax benefits for property improvements. This would incentivise landlords to make upgrades which would improve the overall quality of UK housing stock.”
He also advises those landlords who have increased rents should consider investing their extra income to fund greater energy efficiency in their properties.
He adds: “Despite changes to tax reliefs, buy-to-let landlords claimed back an increased amount from the taxman in the last year.”
“Within an inflationary environment, buy-to-let remains an attractive investment because landlords have the opportunity to increase rents in line with wage growth.”
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