New homes

Financial Focus for landlords in 2021

Posted May 27th 2021
Financial Focus for landlords in 2021

There are numerous changes affecting landlords in 2021. Our helpful guide focuses on five key financial pointers that landlords need to be aware of.

  1. The end of mortgage payment holidays

During the pandemic, landlords with Buy to Let mortgages could apply for payment deferrals for up to six months. This was due to come to an end on 31st March, but the scheme was extended to 31st July 2021, as long as borrowers had applied for a holiday before their February mortgage payment.

  1. Stamp Duty holiday extended

In order to support the housing market through the pandemic, a Stamp Duty Land Tax holiday was introduced in England and Northern Ireland for property purchases up to £500,000. This ended until 30th June for properties up to the value of £500,000.

A "tapering period" is now in place, running from from 1st July to 30th September, with the nil-rate band set for properties up to the value of £250,000. From 1st October, the stamp duty threshold will then drop back down to the normal rate of £125,000.

  1. Mortgage interest no longer an ‘allowable expense’ for 2020-21 tax return

The final phase of the withdrawal of mortgage interest and finance costs as an ‘allowable expense’ came to an end on 5th April 2020. That means for your tax return for the year to 5th April 2021, you will simply be able to claim relief on your property finance costs at the basic rate of Income Tax. See detailed information on the GOV.UK website.

  1. Capital Gains Tax (CGT) system under review

Last year, the Chancellor commissioned a report on CGT from the Office of Tax Simplification, which was completed in November 2020. A total of 11 changes were recommended, including:

  • CGT rates should be brought more closely in line with income tax rates
  • The tax-free allowance (currently £12,300) should be cut significantly, to between £2,000 and £4,000
  • Assets that are exempt from Inheritance Tax shouldn’t also benefit from CGT uplift.

The tax revenue that could be raised by making these changes would certainly help build back public finances following the coronavirus pandemic, so we expect to see at least some of the recommendations being put before Parliament this year.

  1. Stamp Duty surcharge introduced for overseas investors

If you are a non-UK resident landlord, from 1st April 2021 you have to pay an additional 2% in Stamp Duty on residential property purchases in England and Northern Ireland, on top of the 3% buy-to-let surcharge.

If you have any questions about any of these planned or possible changes, simply contact your local branch and speak to one of the team.

Contact my local branch