Lockdown Landlords Doing Their 2020 Accounts Now

Lockdown Landlords Doing Their 2020 Accounts Now

Thousands of UK landlords are making the most of the Covid-19 lockdown to get ahead in terms of preparing their 2020 self-assessment returns and accounts.They don’t need to submit them until the end of January next year, but getting them done now will save those traditional last minute panic attacks once the festive period of Christmas and the New Year celebrations are over.

Those that have already taken action have seen how their tax bills have risen yet again as a result of 75% of their finance costs being disallowed in the 2010/20 tax year. They might also realise that it is going to get a lot worse in the current tax year when they can offset none of their finance costs against their income whatsoever.

The truly smart landlords are also utilising the lockdown period to explore whether any of the alternative ownership structures might have a better tax outcome for them.

Prior to introducing the Section 24 legislation “restricting finance cost relief for private landlords to the basic rate of tax” in his Summer 2015 Budget, the Chancellor at that time (George Osborne) commissioned the OBR (Office of Budget Responsibility) to produce an impact report. That report suggested that 19% of all private sector residential landlords would be affected by the legislation and pay more tax. Therefore, we can deduce that circa 400,000 UK landlords have mortgages and are higher rate tax-payers.

The Property118 Tax team are specialists in advising on incorporation relief, but very few landlords actually qualify for reliefs to make a viable case to actually proceed. Therefore, it is important to note that Property118 and Cotswold Barristers also recommend a variety of other ownership structures. All recommendations are bespoke, we do not believe in a ‘one-size-fits-all’ approach.

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