Making mort overpayments - tax impact?

MoneySavingMission

Hi
I'm hoping someone can advise. I have a fixed rate BTL mortgage with Mort Express. In attempt to reduce their mortgage book, they currently have no early redemption charges / penalties for overpayment.
I intend to pay regular capital repayments in addition to the reg mort payment.
How does this sit with a tax perspective?
Thanks in advance.

fengirl_2

You only receive tax relief on the interest paid on the mortgage, so presumably these would reduce and increase your tax liability. But you never do things just for tax reasons.

MoneySavingMission

Thanks. I have a capital & repay btl mortgage and understand that i can only claim the interest componet of the mortgage payment under regular expenses.
I have opted for capital repayments to reduce the term and not the monthly payment (that remains fixed at mo) Does this make a difference? I would have thought that if i was reducing the payment then obviously this was widening the tax gap, however, i've opted for reducing term?

CLAPTON

MoneySavingMission wrote: »

Thanks. I have a capital & repay btl mortgage and understand that i can only claim the interest componet of the mortgage payment under regular expenses.
I have opted for capital repayments to reduce the term and not the monthly payment (that remains fixed at mo) Does this make a difference? I would have thought that if i was reducing the payment then obviously this was widening the tax gap, however, i've opted for reducing term?

all overpayments reduce the capital
and with less capital owing there is less interest being paid

MoneySavingMission

Sorry I can't be explaining my question well enough.
I know that all additional overpayments (either term or payment reduction) by nature reduce the overall capital outstanding.
My query is specifically re the impact on annual accounts if i'm making regular overpayments to reduce the term.

reddevilled

Well wouldn't just the interest be going through the face of the p&l, and the reduced liability showing in the balance sheet?

ceeforcat

The question was - Does this make a difference? The answer is no -

overpayments = less capital balance= less interest payable = more profit.