Income tax bands and allowances

The personal allowance, which is the level of income which can be received without paying tax has increased from £11,850 to £12,500 (subject to having total income less than £100,000).

The higher-rate tax threshold has also increased to £50,000 from £36,350 meaning that more income can be made before paying higher rate tax.

Capital gains tax annual exemption increase

If you dispose of an investment property then you may pay less tax due to the capital gains annual exemption being increased. The annual exemption has increase to £12,000 and therefore any properties held jointly with a spouse or partner may mean that capital gains of £24,000 can be made before any tax is paid.

Mortgage relief restriction

Mortgage interest tax relief is continuing to be phased out in relation to buy-to-let mortgages. In 2019/20 landlords will only be able to deduct 25% of the interest paid. They will however be able to claim a 20% tax credit in relation to the other 75%. This means that if you are a higher rate tax payer then your tax will increase significantly.

Possible future changes to CGT

Under a change proposed at last year’s Autumn Budget, from 6 April 2020 there would be a number of reductions in available reliefs on disposals of properties. Currently, a property that was previously occupied as an individuals’ principal private residence whereby the individual moved out is subject to an allowance of the last 18 months tax free due to deemed occupancy. This would be reduced to 9 months. Proposals also would restrict lettings relief, which is currently £40,000 to only apply in situations whereby the landlord continues to live with their tenants.

Although these changes are still under consultation, they would have major impact in future tax years. If you are considering selling a property that your previously lived in, it may be beneficial to sell before the end of the tax year. Further advice should be sought to quantify any saving.

Letting fee bans

During the coming year, there will be a massive change in relation to landlords and estate agents being banned from charging tenants any fees in relation to lettings. From 1st June 2019 all fees will need to be paid by landlords which will results in the costs of letting properties increasing to landlords.

Deposit Schemes

On 1st April 2019 it became mandatory for all lettings agencies to join a government approved scheme to protect all client money including deposits and rental income.

Tags: UK200

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