Majority of Landlords Saw Increase to their Tax Bills in 2017-18

The majority (58%) of landlords saw an increase to their tax bills in 2017-18, according to the latest PRS Trends Report from Paragon, for the first quarter (Q1) of 2019.

The survey tracks the opinion and experience of over 200 landlords across the UK.

Landlords with three or more properties were more likely to report an increase in their 2017-18 tax bills than those with smaller portfolios, with an average rise in tax of £3,039 for those reporting growth.

While more than 60% of landlords confirmed that the change in their 2017-18 tax bills was as expected, one third (33%) said that it was either a little or a lot more than estimated.

Almost half (49%) of landlords who reported a higher than expected increase said that they would make changes to their portfolios as a result, with the most popular measures including: selling property (24%), raising rent prices (20%), and reducing borrowing (19%).

Mortgage interest tax relieffor buy-to-let landlords is being phased out over a four-year period and replaced with a basic rate tax credit. 

In the 2017-18 tax year, landlords could deduct 75% of their finance costs from their rental income. This was reduced to 50% in 2018-19. It will fall to 25% in 2019-20, and then to 0% in the following tax year.

John Heron, the Director of Mortgages at Paragon, says: “These figures provide early insight into how the tax changes impacted landlords in the first year of implementation. The January tax deadline was the first real data point for measuring change, and it’s clear that landlords are continuing to adapt their approach as the transition progresses.

“The fact that almost one quarter of landlords intend to respond by selling property is bad news for tenants, impacting supply to the sector, driving rental inflation and, ultimately, making it more difficult for those that rely on the UK’s private rented sector for a home.”

Did you see a rise to your tax bill in 2017-18?